FULL

An Integrated Communications Program
IMC
• Communications –Process of informing,
persuading and influencing consumer
behavior.
• Integrated Marketing Communications-
Coordinated use of various communications
mediums to accomplish a central objective.
Service Environment
Competition
Life Cycle
Marketing Strategy
Competitive Consumer
Operational Target
Advantage Position
Position Market
Marketing Mix
Service Outcome Price

Distribution
Servicescape Promotion Firm Image
Integrated Communications Program

Role of Communications
• Inform
• Persuade
• Influence consumer behavior
All communications should be integrated

so the same message is sent by every
communication.
Communications Challenges
in Services Marketing
• Intangible nature of service performances.
• Customer involvement in production.
• Services are harder for customers to evaluate.
• The need to balance demand and supply.
• Importance of customer contact personnel.
Communications Challenges
in Services Marketing
• Facilitate customer involvement in production
– prepare customers for service experience and demonstrate roles
– teach customers about new technologies, new features
• Help customers to evaluate service offerings
– provide tangible or statistical clues to service performance
– highlight quality of equipment and facilities
– emphasize employee qualifications, experience, professionalism
• Simulate or dampen demand to match capacity
– provide information about timing of peak, off-peak periods
– offer promotions to stimulate off-peak demand
• Promote contribution of service personnel
– help customers understand service encounter
– highlight expertise and commitment of backstage personnel
Setting Clear Objectives: Checklist for
Marketing Communications Planning (“5 Ws”)
• Who is our target audience?

• What do we need to communicate and
achieve?
• How should we communicate this?
• Where should we communicate this?
• When do communications need to take
place?
Communication Pre-Purchase Phase
Objectives
• Reduce purchase risk
• Increase probability of purchase
• Develop corporate image
• Build brand equity
• Increase awareness
Communication Service Encounter
Objectives
• Enhance customer satisfaction

• Increase repeat purchase behavior
Communication Post-Purchase
Phase Objectives
• Reduce cognitive dissonance

• Stimulate positive word-of-mouth
communications
• Increase repeat purchase behavior
Marketing Communications Mix for
Services
(Fig. 10.4)
Personal Publicity & Instructional Corporate

Advertising Sales Promotion
Communications Public Relations Materials Design
Press
Selling Broadcast Sampling Web sites Signage
releases/kits
Customer Press Interior decor

Print Manuals
service Coupons conferences
Sign-up Special
Training Internet Brochures Vehicles
rebates events
Video-
Telemarketing Outdoor Gifts Sponsorship Equipment
audiocassettes
Word-of-mouth Prize Trade Shows, Software

Word Direct mail
(other of mouth
customers) promotions Exhibitions CD-ROM Stationery
Media-initiated Voice mail Uniforms

* coverage
Key: * Denotes communications originating from outside the organization

What is Brand Equity and Why Does It Matter?
(From Berry, “Cultivating Brand Equity”)
Definition: A set of assets and liabilities linked to a

brand’s name and symbol that adds to (or subtracts
from) the perceived value of the product
Insights
• Brand equity can be positive or negative
• Positive brand equity creates marketing advantage for
firm plus value for customer
• Perceived value generates preference and loyalty
• Management of brand equity involves investment to
create and enhance assets, remove liabilities
A Service Branding Model:
How Communications + Experience Create Brand Equity
Marketer-controlled communications
Firm’s Presented Brand (Sales, Awareness of
Advertising, PR) Firm’s Brand
Uncontrolled brand communications

Firm’s
What Media, Intermediaries,
Brand Equity
Word-of-Mouth Say re: Firm
Customer’s Experience Meaning Attached

with Firm To Firm’s Brand
Source: Adapted from L. L. Berry ( Fig. 1)

Role of Advertising
• Informative
• Persuasive
• Reminder
• Action inducing
Advertising
• Make service more tangible
• Decrease perishability
• Reduce variability
• Reduce inseparability
• Reduce purchase risk
• Reinforce consumer position
• Strengthen brand loyalty
• Enhance repeat purchase behavior
Coupons
Rebates
Refunds Premiums
Sales
Price-offs Promotion Contests
Options Sweepstakes
Tie-ins
Sampling
Frequency
Programs
Sales Promotion Options
• Coupons- printed price reduction offers.
• Premiums – free merchandise or services
offered to customers for purchasing a good or
service.
• Contests- allows customers to win prizes for
performing some activity or making a purchase.
• Sweepstakes- awards free prizes to customers
based on a drawing of winning tickets.
• Tie- Ins- includes two or more goods or services
within the same promotional offer.
Sales Promotion Options
• Frequency Programs- aimed at current
customers that are designed to build repeat
purchase behavior and brand loyalty by
rewarding customers for their patronage.
• Sampling
• Price- off temporary reduction in the price
of a good or service designed to stimulate
immediate sales increase.
Communication Objectives Sales
Promotions
Reduce purchase risk Increase purchase probability
• Coupons • Coupons
• Samples • Samples
• Price-offs • Price-offs
• Tie-ins • Tie-ins
• Frequency program
• Excellent • Good
Promotions
Develop firm image Build brand equity
• Premiums • Premiums
• Frequency programs • Frequency program
Promotions
Increase awareness Enhance customer satisfaction
• Contest and Sweepstakes • Premiums

• Tie-ins • Samples
• Samples
Promotions
Increase repeat purchases Reduce cognitive dissonance
• Coupons • Premiums
• Premiums
• Price-offs
• Rebates and refunds
Promotions
Stimulate Positive Word-of-Mouth Communications
• Premiums
Operational Position Sales
Promotions
Cost Efficiency Customization
• Coupons • Premiums
• Contests & Sweepstakes • Frequency program
• Tie-ins
• Samples
• Price-offs
Operational Position Sales
Promotions
Technical Service Quality Functional Service Quality
• Premiums • Premiums
• Samples • Frequency program
• Tie-ins • Samples
Marketing Trends
• Sponsorship marketing
• Cause-related marketing
• Adventure marketing
Steps in Developing an Integrative
Communications Program
1. Identify the target market
2. Identify the target purchase phase
3. Identify the consumption value
4. Determine the communication objectives
5. Determine the consumer image position
6. Design the message
7. Determine the promotional mix
8. Measure effectiveness
DISTRIBUTION OF SERVIECES
Chapter Nine
Distribution
Distribution
• Availability and accessibility of service to
consumers.
• Availability- service is available to consumer
when he or she wants.
• Accessibility- relative ease for the consumer to
conduct a transaction with the service vendor.
• Operating hours- service organisations need to
have working hours that are compatible with
their target markets
Distribution
• Direct channels
• Indirect channels
Components of the Service Process
• Information
• Reservation
• Payment
• Consumption
Channel Options
• Exclusive distribution
• Selective distribution
• Intensive distribution
Distribution Growth Strategies
• Multi-site - expansion of service to another
location.
• Multi-service - addition of a new service to
firm’s existing portfolio.
• Multi-segment - expansion of the current
service to a new market segment.
Distribution Growth Strategies
• Multi-site
• Multi-service
• Multi-segment
• Multi-site, multi-service
• Multi-site, multi-segment
• Multi-service, multi-segment
• Multi-site, multi-service, multi-segment
Multi-site Strategy
• Most common form of distribution growth

strategy.
• Ideal for firms operating in cost efficiency
position.
• Used by firms having narrow, highly
specialized service offering.
• Certain risks involved like managing multiple
sites.
Multi-Service Strategy
• Ideal for firms operating in customization and
functional service quality position.
• Core services –primary services central to a
firm’s mission.
• Peripheral Services- secondary services that
support a firm’s core or primary service.
• Adding peripheral service is easy as compared
to adding another core service.
• Major risk in multi-service distribution
strategy is decline in efficiency.
Multi Segment Strategy
• Offering current service to a new market
segment
• Effective for firms with underutilized
facilities.
Operational Position and Distribution
Strategies
Operational Position --- Growth Strategy

Cost efficiency Multi-site
Technical Service Quality Multi-segment
Functional Service Quality Multi-service
Customization Multi-service
International Expansion
• Direct exporting
• Joint ventures
• Direct foreign investment
• Agents
• Franchises
• License agreements
Franchising
• A multi- distribution strategy involving the
selling of a service concept to a third party
who agrees to establish and operate service
facility according to franchiser’s specifications.
Franchising
Advantages Disadvantages
Franchiser
1. Capital for growth
1. Lower potential profits
2. Faster growth
2. Controlling service quality
3. Additional management
3. Controlling firm image
4. Additional income
Franchisee
1. Lower risk
1. Franchisee fees
2. Established brand name
2. Lack of freedom
3. Successful business plan
3. Controlled by franchiser
4. Expert assistance
Franchising
• Franchising works well for firms operating in
the cost-efficiency position as the franchiser’s
operation can be easily duplicated by the
franchisees.
• Franchising also works well for firms
operating in the technical service quality
position as methods used to produce superior
service can be specified by the franchiser and
passed on to the franchisee.
Branding
• Service firms use branding to assure the
consumer they will receive uniform service.
• Branding provides value by enhancing the
efficiency and effectiveness of marketing
programs.
• Brand Loyalty and repeat purchase behaviors
are increased.
• Once a brand has been established, it allows a
firm to leverage their position through brand
extensions, higher prices and higher margins.
Branding
• To maximize the benefits of a brand, service
providers should meeting the following
characteristics:
• Brand is distinctive.
• Brand is relevant.
• Brand has a tangible quality.
• In branding a company must decide if they
want to use a single or multiple brand
Distribution Management
Organizational Economies-of-Scale
Structure
• Service-specific
• Centralized
• Site-specific
• Decentralized
• Firm-specific
Customer-Focused Distribution
• Identify market segments

• Identify benefits sought by customers
• Match customer needs to channel and
distribution strategies
• Manage quality control
• Manage corporate growth
INDUSTRIAL POLICIES INDIA
INDUSTRIAL POLICY IN INDIA:
ISSUES, OBJECTIVES & EXPERIENCE
Dr. Raj Agrawal

Structure
• Industrial Policy: Objectives & Evolution
• Current Status
• Evaluation
Background:
• Planning and Industrial policy evolution highly inter-twined:
– Objectives of industrial policy articulated in the Industrial
Policy Resolutions of 1948 and 1956
– Specific priorities and strategies spelt out in successive five
year plans to be implemented by:
– A system of licensing provided for by the Industries
(Development & Regulation) Act, 1951; and
– A system of import licensing and foreign trade policies meant
to promote import substituting industrialization
– Licensing ensured realization of physical targets for capacity
set by the plan, trade policy sought to promote domestic
industrialization by physical allocation of imports by
products.
•
Industrial Policy Resolution 1948
• Outlined the approach to industrial growth and
development
• Emphasized the importance of securing a
continuous increase in production and ensuring its
equitable distribution.
Progressively active role for the State in the

development of Industries.
• State monopoly: Arms and ammunition, atomic
energy and railway transport
• State exclusively responsible for the establishment of
new undertakings in six basic industries-except where,
in the national interest, the State itself found it
necessary to secure the cooperation of private
enterprise.
• Rest of the industrial field open to private

enterprise though the State would also
progressively participate in this field.
• After the adoption of the Constitution and the

socio-economic goals, the Industrial Policy was
comprehensively revised and adopted in 1956.
• Sought to accelerate the rate of economic growth
and speed up industrialization to achieve a
socialist pattern of society.
• Capital was scarce & the base of entrepreneurship
not strong enough. Hence, the gave primacy to the
role of the State to assume a predominant and
direct responsibility for industrial development.
• Objectives:
– Improvement in living standards and working
conditions for the mass of the people.
– Reduction in income and wealth disparities
– Prevention of private monopolies and
concentration of economic power in different
fields in the hands of small numbers of
individuals.
– Progressively predominant and direct

responsibility for the State in setting up new
industrial undertakings and for developing
transport facilities
– Undertake State trading on an increasing scale.
– Equal opportunity for the private sector to
develop and expand.
– Private sector to develop on the principle of

cooperation; increasing proportion of the
private sector activities to develop on
cooperative lines.
– The adoption of the socialist pattern of society
as the national objective.
– The need for planned and rapid development.
– Public sector: All industries of basic and

strategic importance, or in the nature of public
utility services.
– The State can undertake any type of industrial
production.
• Categorization of industries:
i) Set of industries the future development of

which will be the exclusive responsibility of the
State
• ii) Category of industries which will be
progressively state-owned and in which the State
will, therefore, generally take the initiative in
establishing new undertakings, but in which
private enterprise will also be expected to
supplement the efforts of the State.
• iii) Rest of industries left to the initiative and

enterprise of the private sector.
• Stress the role of cottage and village and small

scale industries in the development of the national
economy.
• Disparities in levels of development between

different regions should be progressively reduced.
Industrial Policy 1973
• Certain structural distortions called for policy

changes in IPR 1956
• Provide for a closer interaction between the
agricultural and industrial sectors
• Highest priority to the generation and
transmission of power.
• Identify products to be reserved for the small scale
sector: list of industries exclusively reserved for
the small scale sector expanded from 180 items to
more than 500 items.
• Within the small scale sector, a tiny sector was also

defined with investment in machinery and
equipment up to Rs.1 lakh & located in towns
with a population < 50,000 according to
1971 census figures, and in villages.
• Proposal for special legislation to protect cottage
and household industries
• Compulsory export obligations, merely for

ensuring the foreign exchange balance of the
project, would no longer be insisted upon while
approving new industrial capacity.
• In the areas of price control of agricultural and

industrial products, the prices would be regulated
to ensure an adequate return to the investor.
• Emphasis on
– producing inputs needed by a large number of
smaller units and making adequate marketing
arrangements.
– upgrading the technology of small units.
– Promoting the development of a system of
linkages between nucleus large plants and the
satellite ancillaries
• Emphasis on:
– the development of small scale industries, the
investment limit in the case of tiny units was enhanced
to Rs.2 lakh, of a small scale units to Rs.20 lakh and of
ancillaries to Rs.25 lakh.
– building buffer stocks of essential raw materials for the
Small Scale Industries for operation through the Small
Industries Development Corporations in the States
and the National Small Industries Corporation in
the Centre.
• Emphasis on:
– Industrial processes and technologies involving
optimum utilization of energy or the exploitation of
alternative sources of energy for giving special
assistance, including finance on concessional terms.
The Industrial Policy Statement 1980
• Formulated wrt the Industrial Policy Resolution of 1956 to

provide for
(i) Optimum utilization of installed capacity;
(ii) Maximum production and achieving higher
productivity;
(iii) Higher employment generation;
(iv) Correction of regional imbalances;
(v) Strengthening of the agricultural base through agro
based industries and promotion of optimum inter-sectoral
relationship;
• (vi) Promotion of export-oriented industries;
The Industrial Policy Statement 1980
• (vii) Promotion of economic federalism through equitable

spread of investment and dispersal of returns;
• (viii) Consumer protection against high prices and bad

quality.
INDUSTRIAL POLICY 1991
• Govt . recognizes the need for

– social and economic justice, to end poverty and
unemployment and to build a modern, democratic,
socialist, prosperous and forward-looking India
– India to grow as part of the world economy and not in
isolation
– Greater emphasis placed on building up ability to pay
for imports through our own foreign exchange
earnings
– development and utilization of indigenous capabilities
in technology and manufacturing as well as its
up gradation to world standards.
• Sound policy framework encompassing

encouragement of entrepreneurship, development
of indigenous technology through investment in
research and development, bringing in new
technology, dismantling of the regulatory system,
development of the capital markets and increasing
competitiveness for the benefit of the common
man.
• The spread of industrialization to backward areas

of the country will be actively promoted
through appropriate incentives, institutions and
infrastructure investments.
• Government will provide enhanced support to the

small-scale sector so that it flourishes in an
environment of economic efficiency and
continuous technological up gradation
• Foreign investment and technology collaboration

will be welcomed to obtain higher
technology, to increase exports and to expand the
production base.
Government will endeavor to abolish the

monopoly of any sector or any individual
enterprise in any field of manufacture, except on
strategic or military considerations and open all
manufacturing activity to competition.
• The Government will ensure that the public sector

plays its rightful role in the evolving
socioeconomic scenario of the country.
Government will ensure that the public sector is
run on business lines as envisaged in the Industrial
Policy Resolution of 1956 and would continue to
innovate and lead in strategic areas of national
importance.
• Government will fully protect the interests of

labour, enhance their welfare and equip them in
all respects to deal with the inevitability of
technological change
Labour will be made an equal partner in
• progress and prosperity
• Workers’ participation in management will be
promoted
• Workers cooperatives will be encouraged to

participate in packages designed to turn around
sick companies.
• The major objectives of the new industrial policy

package will be to build on the gains already
made, correct the distortions or weaknesses that
may have crept in, maintain a sustained growth in
productivity and gainful employment and attain
international competitiveness.
• Need to preserve the environment and ensure the

efficient use of available resources.
• Government’s policy will be continuity with

change
• In pursuit of the above objectives, Government

have decided to take a series of initiatives in
respect of the policies relating to the following
areas.
A. Industrial Licensing.
B. Foreign Investment.
C. Foreign Technology Agreements.
D. Public Sector Policy.
E. MRTP Act.
• Industrial licensing:
– Modified industrial licensing policy to ease restrictions on
capacity creation, respond to emerging domestic & global
opportunities by improving productivity
– Abolished industrial licensing for most industries but for 18
categories
– Small scale sector reserved
• Foreign Investment:
– FDI (up to 51% foreign equity) permitted in high priority
industries (high investment and advanced technology) &
export oriented companies
• Foreign Technology Agreements:

• Towards technological dynamism, automatic approval
for technological agreements related to high priority
industries; eased procedures for hiring foreign technical
expertise
• Public Sector Policy:
Restructuring pubic sector units, raise resources
through pubic participation PSUs, refer sick units to
Board of Industrial & Financial Reconstruction
• MRTP Act:
• Abolished scrutiny of investment decision of MRTP companies etc.
Current Scenario:
• Substantial changes:
– Only six industries require compulsory licensing
– Only three industries reserved for the public sector
– Relation of restriction on FDI: FDI up to 100 % under
automatic route for most manufacturing activities in
Special Economic Zones; FDI ceiling in pvt banking
sector up to 74%; oil exploration (100%); natural gas
and LNG pipelines (100%); telecom (74%)
• Small Scale industries sector: reduced # of items
reserved from 821 (1991) to 506 (2005)
Lessons from India:
• Industrial Policy should not be about:

– Controlling Prices
– Controlling Quantity
– Specifying Geographical Location of Activity
– Preemption by Public Sector
– Policy Body, Regulatory Body and Service Provider
being Government Agencies
Industrial Policy cannot be Viewed in Isolation
Education • Schooling → Vocational \ Technical Education → Entry into
Workforce → Employment ↔ Life Long Learning
• Typology of Higher Education Institutions
Innovation • Public – Private – Partnership Models
• Open Science Model, Licence Model, Innovation Model
• Industry – Academia Collaboration
• Office of Sponsored Projects: Funding agreements
• Office of Technology Transfer: Patenting and licensing
technology
Global • Open Source Drug Discovery is a CSIR Team India Consortium
Cooperation with Global Partnership with a vision to provide affordable
healthcare to the developing world. http://www.osdd.net/
Fiscal • Tax Incentives for R&D Expenditure

• Funding for Industry – Academia Collaboration
• Transparent Process (Metrics for Evaluation) for Funding Basic
Research Vs Applied Research
lec1
Chapter 1
Introduction to
Services Marketing
How Important is the Service Sector in
Our Economy?
• In most countries, services add more economic value than
agriculture, raw materials and manufacturing combined
• In developed economies, employment is dominated by

service jobs and most new job growth comes from services
• Jobs range from high-paid professionals and technicians to
minimum-wage positions
• Service organizations can be any size—from huge global
corporations to local small businesses
• Most activities by government agencies and nonprofit
organizations involve services
Introduction
• Services are deeds, processes and performance.
• Services include all economic activities whose
output is not a physical product, is generally
consumed at the same time it is produced, and
provides added value in forms( convenience,
comfort etc.) that are essentially intangible.
• Need to distinguish between SERVICE and
CUSTOMER SERVICE.
• Customer Service is the service provided in
support of a company’s core products.
Examples of Service Industries
• Health Care
– hospital, medical practice, dentistry, eye care
• Professional Services
– accounting, legal, architectural
• Financial Services
– banking, investment advising, insurance
• Hospitality
– restaurant, hotel/motel, bed & breakfast,
– ski resort, rafting
• Travel
– airlines, travel agencies, theme park
• Others:
– hair styling, pest control, plumbing, lawn maintenance,
counseling services, health club
Tangible vs. Intangible Elements in Goods
and Services (Tangibility Spectrum)
Hi
Salt
Soft drinks
CD Player
Golf clubs
New car
Tailored clothing
Furniture rental
Fast food restaurant
Plumbing repair
Office cleaning
Health club
Airline flight
Retail banking
Insurance
Weather forecast
Lo Intangible Elements Hi
Differences Between
Goods and Services
Intangibility Heterogeneity
Inseparability Perishability
Characteristics of Services
• Intangibility—Lack of tangible assets which
can be seen, touched, or smelled prior to
purchase.
• Perishability—Inability of a service to be
inventoried or stored.
• Inseparability—Simultaneous production
and consumption of a service.
• Heterogeneity—variable levels of service
quality customers receive when they
patronize a service firm.
Implications of Intangibility
 Services cannot be inventoried

 Services cannot be patented
 Services cannot be readily displayed or
communicated
 Pricing is difficult
To Reduce Intangibility
• Stress tangible cues

• Use personal sources of information
• Stimulate word-of-mouth communications
• Create strong corporate image
• Encourage employees to communicate with
customers
Implications of Heterogeneity
Service delivery and customer satisfaction

depend on employee actions
Service quality depends on many
uncontrollable factors
There is no sure knowledge that the service
delivered matches what was planned and
promoted
To Reduce Variability
• Standardization of procedures
• Customization of service
Implications of Perishability
 It is difficult to synchronize supply and

demand with services
 Services cannot be returned or resold
To Reduce Perishability
• Manipulate both demand and supply to

match capacity
Implications of Inseparability
Customers participate in and affect

the transaction
Customers affect each other
Employees affect the service
outcome
Decentralization may be essential
Mass production is difficult
To Reduce Inseparability
• Emphasize selection and training of

employees
• Develop process to manage customers
• Open multiple sites
The Services Marketing Triangle
Company
(Management)
Internal External
Marketing Marketing
“enabling the “setting the

promise” promise”
Employees Interactive Marketing Customers

“delivering the promise”
Source: Adapted from Mary Jo Bitner, Christian Gronroos, and Philip Kotler
Classification of a Service
• Nature of organization
• Nature of service
• Customer relationship
• Nature of demand
• Service package
• Delivery method
Nature of Organization
Purpose Individuals
Businesses
Both
Structure Profit
Nonprofit
Type Public
Private
Four Categories of Services
Employing Different Underlying Processes
What is the Who or What is the Direct Recipient of the Service?

Nature of the
DIRECTED AT PEOPLE DIRECTED AT POSSESSIONS
Service Act?
TANGIBLE People Processing Possession Processing
ACTS
e.g., airlines, hospitals, e.g., freight, repair,
haircutting, restaurants hotels, cleaning, landscaping,
fitness centers retailing, recycling
INTANGIBLE Mental Stimulus Information Processing

ACTS (directed at intangible assets)
Processing
e.g., broadcasting, consulting, e.g., accounting, banking,

education, psychotherapy insurance, legal, research
Customer Relationship
Type of Formal
relationship Informal
Both
Degree of Customer present

participation Customer start and finish
Customer start service
Customer finish service
Nature of Demand
Level of Demand exceeds capacity
demand Sometimes demand exceeds
capacity
Demand does not exceed
capacity
Degree of Wide
fluctuation Narrow
Variable
No fluctuation
Service Package
Number of services One service
and goods One service, one good
One service, multiple goods
Multiple services
Multiple services, one good
Multiple services, multiple goods
Units of service Defined by situation, time, or

both
Degree of equipment High, Medium, or Low

base
Degree of High, Medium, or Low

customization
Degree of durability High, Medium, Low, Relative to

customer, or Cannot be defined
Delivery Method
Availability of service One site
Multiple sites
Nature of delivery Continuous

Discrete
Both
Type of consumption Independent

Collective
Both
Allocation of capacity Reservation

Order-of-arrival
Preferential
Reservation & order-of-arrival
Reservation & preferential
Order-of-arrival & preferential
Reservation, order-of-arrival,
and prefential
Services Marketing Mix:
7 Ps for Services
• Traditional Marketing Mix

• Expanded Mix for Services: 7 Ps
• Building Customer Relationships Through
People, Processes, and Physical Evidence
Traditional Marketing Mix
• All elements within the control of the firm that

communicate the firm’s capabilities and image to
customers or that influence customer satisfaction
with the firm’s product and services:
 Product
 Price
 Place
 Promotion
Expanded Mix for Services --
the 7 Ps
• Product
• Price
• Place
• Promotion
• People
• Process
• Physical Evidence
Expanded Marketing Mix for Services
PRODUCT PLACE PROMOTION PRICE

Physical good Channel type Promotion Flexibility
features blend
Quality level Exposure Salespeople Price level

Accessories Intermediaries Advertising Terms
Packaging Outlet location Sales Differentiation
promotion
Warranties Transportation Publicity Allowances
Product lines Storage
Branding
Expanded Marketing Mix for Services
PEOPLE PHYSICAL PROCESS

EVIDENCE
Employees Facility design Flow of activities
Customers Equipment Number of steps
Communicating Signage Level of customer

culture and values involvement
Employee research Employee dress
Other tangibles
The 7Ps:
(1) Product Elements
All Aspects of Service Performance that Create
Value
• Core product features—both tangible and
intangible elements
• Performance levels relative to competition
• Benefits delivered to customers (customers
don’t buy a hotel room, they buy a good night’s
sleep)
• Guarantees
The 7Ps:
(2) Place and Time
Delivery Decisions: Where, When, and How
• Geographic locations served
• Physical channels
• Electronic channels
• Customer control and convenience
• Channel partners/intermediaries
The 7Ps:
(3) Promotion and Education
Informing, Educating, Persuading, and Reminding Customers
• Marketing communication tools
– media elements (print, broadcast, outdoor, retail, Internet, etc.)
– personal selling, customer service
– sales promotion
– publicity/PR
• Imagery and recognition
– branding
– corporate design
• Content
– information, advice
– persuasive messages
– customer education/training
The 7Ps:
(4) Price and Other User Outlays
Marketers Must Recognize that Customer Outlays
Involve
More than the Price Paid to Seller
Traditional Pricing Tasks
• Selling price, discounts, premiums
• Margins for intermediaries (if any)
• Credit terms
Identify and Minimize Other Costs Incurred by Users
• Additional monetary costs associated with service usage (e.g., travel to service
location, parking, phone, babysitting,etc.)
• Time expenditures, especially waiting
• Unwanted mental and physical effort
• Negative sensory experiences
The 7Ps:
(5) Physical Environment/Evidence
Designing the Servicescape and providing tangible
evidence of service performances
• Create and maintaining physical appearances
– buildings/landscaping
– interior design/furnishings
– vehicles/equipment
– staff grooming/clothing
– sounds and smells
– other tangibles
• Select tangible metaphors for use in marketing
communications
7Ps:
(6) Process
Method and Sequence in Service Creation and
Delivery
• Design of activity flows
• Number and sequence of actions for customers
• Nature of customer involvement

• Role of contact personnel
• Role of technology, degree of automation
The 7Ps:
(7) People
Managing the Human Side of the Enterprise
• The right customer-contact employees performing tasks well
– job design
– recruiting/selection
– training
– motivation
– evaluation/rewards
– empowerment/teamwork
• The right customers for the firm’s mission
– fit well with product/processes/corporate goals
– appreciate benefits and value offered
– possess (or can be educated to have) needed skills (co-production)
– firm is able to manage customer behavior
Consumer Evaluation
Processes for Services
• Search Qualities
attributes a consumer can determine prior to
purchase of a product
• Experience Qualities
attributes a consumer can determine after purchase
(or during consumption) of a product
• Credence Qualities
characteristics that may be impossible to evaluate
even after purchase and consumption
Continuum of Evaluation for
Different Types of Products
Most Most
Goods Services
Easy to evaluate
Difficult to evaluate
High in search High in experience High in credence

qualities qualities qualities
Purchase Model for Services
• Pre-Purchase Phase
• Service Encounter
• Post-Purchase Phase
Pre-Purchase Phase Internal Factors
• Individual needs and wants

• Past experience
• Expectations
• Involvement level
Pre-Purchase Phase External Factors
• Competitive options
• Word-of-mouth communications
Pre-Purchase Phase Firm-Produced
Factors
• Promotions
• Pricing
• Distribution
Pre-Purchase Phase Risk
Types
• Performance
• Financial
• Time loss
• Opportunity
• Psychological
• Social
• Physical
Categories in Consumer Decision-Making and
Evaluation of Services
Information Evaluation of
Search Alternatives
 Use of personal sources  Evoked set
 Perceived risk  Emotion and mood
Culture
 Values and attitudes
 Manners and customs
Purchase and Post-Purchase

Consumption Evaluation
 Service provision as  Attribution of dissatisfaction
drama
 Service roles and scripts  Brand loyalty
 Compatibility of customers
(Information search)
Use of personnel source
• In buying services consumers rely more on
personal sources. WHY?
• Personal influence becomes pivotal as product
/service complexity increases
• Word of mouth important in delivery of
services
• With service most evaluation follows
purchase
Perceived Risk
• More risk would appear to be involved with
purchase of services (no guarantees)
• Many services so specialised and difficult to
evaluate (How do you know whether the
plumber has done a good job?)
• Lesser standardization.
• Lesser pre purchase information.
• Therefore a firm needs to develop strategies
to reduce this risk, e.g, training of employees,
standardisation of offerings
(Evaluation of Alternatives)
Evoked Set
• The evoked set of alternatives likely to be smaller with
services than goods
• If you would go to a shopping centre you may only find one
dry cleaner or “single brand.”
• Lesser companies providing same services in a given
geographical area.
• It is also difficult to obtain adequate pre purchase information about
service
• Consumer may choose to do it themselves, e.g. garden
services
Emotion and Mood
• Emotion and mood are feeling states that influence people’s
perception and evaluation of their experiences
• Moods are transient
• Emotions more intense, stable and pervasive
• May have a negative or positive influence.
• Customer in a positive mood are more willing to participate
in behaviors that help service encounter succeed.
• Moods and emotions enhance and amplify experiences,
making them more positive or more negative than they
might seem in absence of the moods and emotions.
Service as Theatre
“ All the world’s a stage

and all the men and
women merely players.
They have their exits and
their entrances and each
man in his time plays
many parts”
William Shakespeare
As You Like It
(Purchase and consumption)
The Dramaturgy of Service Delivery
• Service dramas unfold on a “stage”--settings may change
as performance unfolds
• Many service dramas are tightly scripted, others
improvised
• Front-stage personnel are like members of a cast
• Like actors, employees have roles, may wear special
costumes, speak required lines, behave in specific ways
• Support comes from a backstage production team
• Customers are the audience—depending on type of
performance, may be passive or active
Role and Script Theories
• Role: A set of behavior patterns learned through
experience and communication
• Role congruence: In service encounters, employees and
customers must act out defined roles for good outcomes
• Script: A sequence of behavior to be followed by
employees and customers during service delivery
– Some scripts (e.g. teeth cleaning) are routinized, others
flexible
– Technology change may require a revised script
– Managers should reexamine existing scripts to find ways to
improve delivery, increase productivity, enhance
experiences
Service Provision as Drama
• Need to maintain a desirable impression
• Service “actors” need to perform certain
routines, the way they appear, and their
commitment are all essential to service
delivery.
• Physical setting important, smell, music, use
of space, temperature, cleanliness, etc.
Customer Satisfaction is Central to the
Marketing Concept
• Satisfaction defined as attitude-like judgment following a
service purchase or series of service interactions
• Customers have expectations prior to consumption,
observe service performance, compare it to expectations
• Satisfaction judgments are based on this comparison
– Positive disconfirmation if better than expected
– Confirmation if same as expected
– Negative disconfirmation if worse than expected
• Satisfaction reflects perceived service quality,
price/quality tradeoffs, personal and situational factors
• Research shows links between customer satisfaction and
a firm’s financial performance
Customer Delight:
Going Beyond Satisfaction
• Research shows that delight is a function of 3
components
– Unexpectedly high levels of performance
– Arousal (e.g., surprise, excitement)
– Positive affect (e.g., pleasure, joy, or happiness)
Post purchase Evaluation
• Attribution of dissatisfaction
When consumers are dissatisfied with purchases they
may attribute dissatisfaction to service provider,
themselves or other external factors.
Consumers generally attribute service failure to 2 type
of factors:
1. Controllable factors
2. Uncontrollable factors
If service failure is attributed to uncontrollable factors
consumer’s dissatisfaction is low.
If service failure is attributed to controllable factors then
consumer’s dissatisfaction may be high.
Post purchase Evaluation
• Brand Loyalty
Degree to which consumers are committed to
particular brand of goods or services depends
on no. of factors:
Cost of changing brands
availability of substitutes
perceived risk associated with purchase degree
to which they have obtained satisfaction in past.
Future Behavior
• Satisfied Customers
– Repeat purchases
– Firm loyalty
– Positive word-of-mouth communications
• Dissatisfied Customers
– Only 1 out of 25 complain
– Firm-switching behavior
– Negative word-of-mouth communications
Role of Culture in Services
• Culture is important in service marketing because
of its effects on the way customers evaluate
services.
• It also influences how companies and their
service employees interact with the customers.
• Value and attitudes help to determine what
members of a culture is think right, important
and desirable.
• Manners and customs represent a culture’s
appropriate way of behaving.
A Service Business is a System Comprising
Three Overlapping Subsystems
Service Operations (front stage and backstage)
• Where inputs are processed and service elements created.
• Includes facilities, equipment, and personnel
Service Delivery (front stage)
• Where “final assembly” of service elements takes place
and service is delivered to customers
• Includes customer interactions with operations and other
customers
Service Marketing (front stage)
• Includes service delivery (as above) and all other contacts
between service firm and customers
Service Marketing System:
High Contact Service--e.g., Hotel
Service Marketing System
Service Delivery System Other Contact Points
Other Advertising
Service Operations System
Customers Sales Calls
Interior & Exterior Market Research
Facilities Surveys
Billing / Statements
Technical Equipment The
Core Customer Miscellaneous Mail,
Phone Calls, Faxes, etc.
Service People Random Exposure to
Facilities / Vehicles
Other Chance Encounters
Backstage Front Stage
Customers with Service Personnel
(invisible) (visible)
Word of Mouth
Service Marketing System:
Low Contact Service--e.g., Credit Card
Service Marketing System
Service Delivery System Other Contact Points
Service Operations System
Advertising
Mail
Market Research
The Surveys
Technical Self Service
Core Equipment Customer Random Exposures
Facilities, Personnel
Phone, Fax,
Web site etc. Word of Mouth
Front Stage
Backstage (visible)
(invisible)
Factors that Influence
Customer Expectations of Services
Explicit & Implicit

Personal Needs Service Promises
Word-of-Mouth
Desired Service Past Experience
Beliefs about
What Is Possible
ZONE
OF
TOLERANCE
Perceived Service
Alterations
Adequate Service Predicted Service
Situational Factors
Source: Adapted from Zeithaml, Parasuraman & Berry

Components of Customer Expectations
• Desired Service Level: wished-for level of service

quality that customer believes can and should be
delivered
• Adequate Service Level: minimum acceptable level
of service
• Predicted Service Level: service level that customer
believes firm will actually deliver
• Zone of Tolerance: range within which customers
are willing to accept variations in service delivery
lovelock06
Chapter 6
Pricing and Revenue

Management
What Makes Service Pricing Strategy
Different (and Difficult)?
• No ownership of services--hard for firms to
calculate financial costs of creating an intangible
performance
• Variability of inputs and outputs--how can firms
define a “unit of service” and establish basis for
pricing?
• Many services hard for customers to evaluate--
what are they getting in return for their money?
• Importance of time factor--same service may have
more value to customers when delivered faster
• Delivery through physical or electronic channels--
may create differences in perceived value
Objectives of Pricing Strategies
• Revenue and profit objectives
– Seek profit
– Cover costs
• Patronage and user base-related objectives

– Build demand
– Build a user base
 Capacity oriented
– Vary prices over time to ensure that demand
matches available at a specific time
The Pricing Tripod
Pricing Strategy
Competition
Costs Value to customer
Three Main Approaches to Pricing
• Cost-Based Pricing
– Set prices relative to financial costs
(problem: defining costs)
• Competition-Based Pricing
– Monitor competitors’ pricing strategy
(especially if service lacks differentiation)
– Who is the price leader?
(one firm sets the pace)
Demand-Based
– Relate price to value perceived by customer
Activity-Based Costing:
(Relating Activities to the Resources They
Consume)
• Managers need to see costs as an integral part of a
firm’s effort to create value for customers
• When looking at prices, customers care about value to
themselves, not what production costs the firm
• ABC management systems examine activities needed
to create and deliver service (do they add value?)
• Must link resource expenses to:
– variety of products produced
– complexity of products
– demands made by individual customers
Net Value =
(Benefits – Outlays)
(Fig. 6.3)
Effort Time
e
Perceived Perceived
Benefits Outlays
Enhancing Gross Value
• Pricing Strategies to Reduce Uncertainty
– service guarantees
– benefit-driven (pricing that aspect of service that creates value)
– flat rate (quoting a fixed price in advance)
• Relationship Pricing
– non-price incentives
– discounts for volume purchases
– discounts for purchasing multiple services
• Low-cost Leadership
– Convince customers not to equate price with quality
– Must keep economic costs low to ensure profitability at low price
Paying for Service:
The Customer’s Perspective
Customer “expenditures” on service comprise both
financial and non-financial outlays
Financial costs:
– price of purchasing service
– expenses associated with search, purchase activity, usage
non-financial outlays
• Time expenditures
• Physical effort (e.g., fatigue, discomfort)
• Psychological burdens (mental effort, negative feelings)
• Negative sensory burdens (unpleasant sensations affecting any of the five
senses)
Determining the Total Costs of a
Service to the Consumer (Fig. 6.4)
Search Costs Price Operating Costs
Related Monetary
Costs Incidental
Expenses
Time Costs
Purchase and
Physical Costs
Use Costs
Psychological
Costs
Sensory Costs
Necessary
After Costs follow-up
Problem
solving
Trading off Monetary and Non-
Monetary Costs (Fig. 6.5)
Which clinic would you patronize if you needed a x-ray
(assuming all three clinics offer good quality) ?
Clinic A Clinic B Clinic C
 Price Rs45  Price Rs.85  Price Rs125
 Located 1 hour away  Located 15 min away  Located next to your
by car or transit by car or transit office or college
 Next available  Next available  Next appointment is
appointment is in 3 appointment is in 1 in 1 day
weeks week  Hours: Mo –Sat, 8am
 Hours: Monday –  Hours: Monday – – 10pm
Friday, 9am – 5pm Friday, 8am – 10pm  By appointment -
 Estimated wait at  Estimated wait at estimated wait at
clinic is about 2 hours clinic is about 30 - 45 clinic is about 0 to 15
minutes minutes
Increasing Net Value by Reducing
Non-financial Costs of Service
• A marketer can increase the net value of a service
either by adding benefits to core product or
reducing financial costs associated with purchase
and use of product.
• Reduce time costs of service at each stage
• Minimize unwanted psychological costs of service
• Eliminate unwanted physical costs of service
• Decrease unpleasant sensory costs of service
Revenue Management: Maximizing Revenue
from Available Capacity at a Given Time
• Based on price customization - charging different
customers (value segments) different prices for same
product
• Useful in dynamic markets where demand can be divided
into different price buckets according to price sensitivity
• Requires rate fences to prevent customers in one value
segment from purchasing more cheaply than willing to
pay
Rate fences are techniques for separating different value
segments so that customers for whom the service offers
high value are unable to take advantage of lower price
Price Elasticity (Fig. 6.6)
Price per Di
unit of De
service
De
Di
Quantity of Units Demanded
De : Demand is price elastic.

Small changes in price lead to big changes in demand.
Di : Demand for service is price inelastic.
Big changes have little impact on demand.
Key Categories of Rate Fences (Table 6.2)
Rate Fences Examples
Physical (Product-related) Fences
Basic Product Class of travel (Business/Economy class)
Size and furnishing of a hotel room
Seat location in a theatre
Amenities Free breakfast at a hotel, airport pick up etc.
Free golf cart at a golf course
Service Level Priority wait listing
Increase in baggage allowances
Dedicated service hotlines
Dedicated account management team
Key Categories of Rate Fences (Table 6.2
cont’d)
Non Physical Fences

Transaction Characteristics
Time of booking or  Requirements for advance purchase
reservation  Must pay full fare two weeks before departure
Location of booking or  Passengers booking air tickets for an
reservation identical route in different countries are
charged different prices
Flexibility of ticket  Fees/penalties for canceling or changing a
usage reservation (up to loss of entire ticket price)
 Non refundable reservation fees
cont’d)
Non Physical Fences (cont’d)

Consumption Characteristics
Time or duration of  Early bird special in restaurant before 6pm
use  Must stay over on Sat for airline, hotel
 Must stay at least five days
Location of  Price depends on departure location, esp in

consumption international travel
 Prices vary by location (between cities, city
centre versus edges of city)
cont’d)
Non Physical Fences (cont’d)

Buyer Characteristics
Frequency or volume  Member of certain loyalty-tier with the firm get
of consumption priority pricing, discounts or loyalty benefits
Group membership  Child, student, senior citizen discounts

 Affiliation with certain groups (e.g. Alumni)
Size of customer  Group discounts based on size of group
group
Relating Price Buckets and Fences to
the Demand Curve (Fig. 6.7)
Price per
Seat
First Class
Full Fare Economy (No Restrictions)
One-Week Advance Purchase

One-Week Advance Purchase, Saturday Night Stayover
3-Week Advance Purchase, Saturday Night Stayover
3-Week Adv. Prchs, Sat. Night Stay., $100 for Changes
3-Wk Adv. Prchs, Sat. Night Stay, No changes/refunds
Late Sales through Consolidators/ Internet,
no refunds
Capacity Capacity
of 1st-class of Aircraft
Cabin
No. of Seats Demanded
Ethical Concerns in Pricing
• Customers are vulnerable when service is hard to evaluate or
they don’t observe work
• Many services have complex pricing schedules
– hard to understand
– difficult to calculate full costs in advance of service
• Unfairness and misrepresentation in price promotions
– misleading advertising
– hidden charges
• Too many rules and regulations
– customers feel constrained, exploited
– customers unfairly penalized when plans change
Pricing Issues:
Putting Strategy into Practice (Table 6.3)
 How much to charge?
 What basis for pricing?
 Who should collect payment?
 Where should payment be

made?
 When should payment be made?
 How should payment be made?
 How to communicate prices?

Consumption follows the Timing of
Health Club Visits
Payments (Research Insight 6.1)
Annual Payment Plan Quarterly Payment Plan
Frequency of
Semiannual Payment Plan Monthly Payment Plan

Health Club Visits
Frequency of
Time Line Time Line

Source: John Gourville and Dilip Soman, “Pricing and the Psychology of Consumption,”
Harvard Business Review, September 2002, 90-96.
Managing demand and supply
Chapter Eleven
Managing Supply, Demand, and Productivity
Managing Supply and Demand
• Firm capacity- maximum no. of customers that
can be served by the firm at one time.
• Optimal capacity- point at which optimal no. of
customers can be served adequately by the staff
and crowding does not adversely affect
patronage.
Variations in demand relative to
Capacity
• When demand exceeds capacity, business is lost.
• If demands exceeds optimal capacity but is less
than maximum capacity, service quality normally
declines.
• Customers are not fully satisfied and service
staff often feels overworked.
• If demand is lower than optimal capacity,
resources are being wasted.
Difficulties in managing
Demand & Supply
• Perishability nature of services
• No buffer for services from demand
• Demand volatile
• Optimal, maximum demand for professional
and business services
Matching Supply and Demand
• Determine demand pattern
• Assess causes of demand variations
• Develop methods for managing supply
• Develop methods for managing demand
Managing Supply
• Part-time employees
• Employees work overtime
• Peak-time operating procedures
• Cross-training of employees
• Increase customer participation
• Shared facilities
• Outsourcing
Part-Time Employees
Benefits Concerns
• Reduce costs • Less training
• Increase capacity • Lower performance
• Lower productivity
• Poor attitude
• Less knowledgeable
• Less personalization
• Higher turnover
Employees Work Overtime
Benefits Concerns
• Employees knowledgeable • Lower service quality
• Employees know due to fatigue
customers • Higher costs
• Cost effective for some
services
• Increase capacity
Peak-Time Operating Procedures
During peak time employees perform only necessary tasks leaving
less important tasks to slower periods.
Benefits Concerns
• Keep operations at • Identifying peak routines
capacity • Lack of personal attention
• Incomplete job
• Crowded facility
• Feeling of being cheated
Cross-Training of Employees
Benefits Concerns
• Keep operation at • Lower service quality
capacity • Lower productivity
• Reduce bottlenecks
• Fill-in for absent
employees
Increased Customer Participation
Benefits Concerns
• Increase productivity • Customers lack expertise
• Maximize capacity • Conflict of scripts
• Reduce costs • Lower service quality
• Sometimes decrease
productivity—if customer
is too slow
Shared Facilities or Equipment
Benefits Concerns
• Reduce capital • Efficient scheduling
investment costs • Access to facility or
• Maximize facility equipment
utilization • Customer confusion
Outsourcing
Benefits Concerns
• Expand capacity • Level of service quality
• Expand supply • Stealing of customers
• Conflicts as to who was
hired
Managing Demand
• Shift demand from high to low demand periods

• Decrease demand during peak demand periods
• Stimulate demand during low demand periods
Shifting Demand
• Business is not lost • Customers may not want
• Service quality is not to shift
adversely affected • Customers may not have
• Increased efficiency control over the way they
use the service
Reducing Demand
• Service quality is normally • Lost revenue
improved • Not a good strategy for
• Increased efficiency firms in the for-profit
sector
Stimulating Demand
• Increased efficiency • May not be profitable
• Increased income • May cause some
• Increased utilization of current customers to
facility shift usage
Tools for Managing Demand
• Reservation system
• Differential pricing
• Communication
Enhancing Productivity
• Quality of workforce
• Capital equipment
• Automating tasks
• Customer/service interaction
• Customer contact and support functions
• Self-service options
• Outsourcing
Changing the Service Process
• Develop customer trust
• Understand customer habits
• Pretest innovation
• Teach customers
• Promote benefits
• Stimulate trial usage
• Monitor performance
Managing Demand and
Capacity
• The Underlying Issue: Lack of Inventory
Capability
• Capacity Constraints & Demand Patterns
• Strategies for Matching Capacity and Demand
• Yield Management: Balancing Capacity
Utilization, Pricing, Market Segmentation, and
Financial Return
• Waiting Line Strategies: When Demand and
Capacity Cannot Be Matched
Understanding Capacity Constraints
and Demand Patterns
Capacity Constraints
– Time, labor, equipment, and facilities
– Optimal versus maximum use of capacity
Demand Patterns
– Charting demand patterns
– Predictable cycles
– Random demand fluctuations
– Demand patterns by market segment
Strategies for Shifting Demand to
Match Capacity
Challenges and Risks in Using
Yield Management
• Loss of competitive focus
• Customer alienation
• Employee morale problems
• Incompatible incentive and reward systems
• Lack of employee training
• Inappropriate organization of the yield

management function
Waiting Line Strategies
• Employ operational logic
– modify operations
– adjust queuing system
• Establish a reservation process
• Differentiate waiting customers

– importance of the customer
– urgency of the job
– duration of the service transaction
– payment of a premium price
• Make waiting fun, or at least tolerable

Issues to Consider in Making Waiting
More Tolerable
• Unoccupied time feels longer than occupied time.
• Preprocess waits feel longer than in-process waits.
• Anxiety makes waits seem longer.
• Uncertain waits seem longer than known, finite
waits.
• Unexplained waits seem longer than explained
waits.
• Unfair waits feel longer than equitable waits.
• The more valuable the service, the longer the
customer will wait.
• Solo waits feel longer than group waits.
Waiting Line Configurations
Redesigning Service Processes
Redesigning Service Processes
Why Redesign?
• Revitalizes process that has become outdated
• Changes in external environment make existing
practices obsolete and require redesign of underlying
processes
• Rusting occurs internally
Natural deterioration of internal processes; creeping
bureaucracy; evolution of spurious, unofficial standards
Symptoms:
• Extensive information exchange
• Data that is not useful
• High ratio of checking control activities to value-adding
activities
Why Redesign?
• Institutions are like steel beams—they tend to

rust. What was once smooth and shiny and
nice tends to become rusty.
• Redesign aims to achieve these
performance measures:
Reduced number of service failures
Reduced cycle time from customer
initiation of a service process to its
completion
Enhanced productivity
Increased customer satisfaction
Process Redesign: Approaches and
Potential Benefits
Eliminating the
• Streamlining the front End and the back end processes
Non-Value • Improve productivity and customer satisfaction
adding steps
• Increase in productivity and service quality

Shifting to • Lower cost perhaps prices
Self Service • Enhance technology reputation
Delivering • Productivity can be increased by eliminating the expensive

retail outlet
Direct services • Increase customer base
Process Redesign: Approaches and
Potential Benefit
• Involves grouping multiple services into one
offering
Bundling • A better fit to the needs of targeted segment.
• Increased productivity with customized
Services service
Redesigning the • Focus on tangible element of the service

process(facility and equipment)
physical aspect • Increase convenience
• Enhance productivity of frontline staff
service • Cultivate interest in customer
processes
The Customer as Co Producer
Levels of Customer Participation
High: Customer works actively with

provider to co-produce the service
*Service cannot be produced without
customer’s active participation
Medium: Customer inputs required to

assist the provider
*provide needed information and
instruction
*Make some personal effort
Low: employees and system do

all the work
*Involves standardized
Customers as Partial Employees
• Customers can influence productivity and
quality of service processes and outputs
• Customers not only bring expectations and

needs but also need to have relevant service
production competencies
• For the relationship to last, both parties need

to cooperate with each other
Managing Customers
• Recruitment and selection
recruit customers that possess the competency to perform the necessary
task
• Job Analysis
are customer aware of their roles and equipped with the right skills
• Education and Training

Information required from them to perform the roles via instructions or
video demonstration
• Motivate
Ensure that they will be rewarded for the performance
• Appraise
Improve customer training or change the role or process
• Ending: last resort

if customer is non complaint consider the termination of relationship
Self-Service Technologies
• SSTs are the ultimate form of customer
involvement where customers undertake specific
activities using facilities or systems provided by
service supplier – Customer’s time and effort
replace those of employees
• Information-based services lend selves

particularly well to SSTs – Used in both
supplementary services and delivery of core
product
• Self-Service Technologies (SSTs)
Many companies and government organizations

seek to divert customers from employee contact
to Internet-based self-service
Time and Cost savings Anxiety and stress experienced by
customers who are uncomfortable with
using them
Flexibility
Convenience of location Some see service encounters as social
experiences and prefer to deal with
people
Greater control over service delivery
High perceived level of customization
Putting SSTs to Test by Asking a Few Simple
Questions
• Does the SST work reliably?
Firms must ensure that SSTs are dependable and user-friendly.
• Is the SST better than interpersonal alternatives?
– Customers will stick to conventional methods if SST doesn’t
create benefits for them
• If it fails, what systems are in place to recover?
– Always provide systems, structures, and technologies that will
enable prompt service recovery when things fail
Managing Customer’s Reluctance to
Change
• Increasing customer’s participation level in a
service can be difficult
• Marketing communications to be used to
• –Prepare customer for change

• –Explain the rationale and benefits
• –What customers need to do differently in the
future
segmentation
PRINCIPLES OF MARKETING
Eighth Edition
Philip Kotler and Gary Armstrong
Chapter 2
Market Segmentation,
Targeting, and Positioning
for Competitive Advantage
Steps in Segmentation,
Targeting, and Positioning
6. Develop Marketing
Mix for Each Target Segment Market
5. Develop Positioning Positioning
for Each Target Segment
4. Select Target
Segment(s) Market
3. Develop Measures Targeting
of Segment Attractiveness
2. Develop Profiles
of Resulting Segments
Market Segmentation
1. Identify Bases
for Segmenting the Market
Step 1. Market Segmentation
Levels of Market Segmentation
Mass Marketing
Same product/service to all consumers
(no segmentation)
Segment Marketing
Different products/service to one or more segments
(some segmentation)
Niche Marketing
Different products/service to subgroups within segments
( more segmentation)
Micromarketing
Products/services to suit the tastes of individuals or locations
(complete segmentation)
Bases for Segmenting Consumer Markets
Geographic
Nations, states,
regions or cities
Demographic
Age, gender, family size
and life cycle,or income
Psychographic
lifestyle,or personality,
values
Behavioral
Occasions, benefits,
uses, or responses
Requirements for Effective Segmentation
Measurable • Size, purchasing power, profiles

of segments can be measured.
Accessible • Segments must be effectively

reached and served.
Substantial • Segments must be large or

profitable enough to serve.
Differential • Segments must respond

differently to different marketing
mix elements & actions.
Actionable • Must be able to attract and serve

the segments.
Stage 1: Market segmentation
Requirements for Effective Segmentation

 Measurable and obtainable: Size, purchasing power, and
characteristics of segments
 Accessible: The segments should be effectively reached and served.
 Substantial and viable: The segment chosen should be large and
profitable. It should be cost-effective for the service marketer to
address the segment.
 Intensity in competition: More the intensity of competition, less
attractive is the segment.
 Actionable: If the segments are attractive and have the potential for
profit making, then effective marketing programmes can be designed.
 Differentiable: The segments should be distinct from each other,
behaving and responding differently.
Step 2. Market Targeting
Evaluating Market Segments
• Segment Size and Growth

– Analyze sales, growth rates and expected profitability.
• Segment Structural Attractiveness

– Consider effects of: Competitors, Availability of Substitute Products
and, the Power of Buyers & Suppliers.
• Company Objectives and Resources

– Company skills & resources relative to the segment(s).
– Look for Competitive Advantages.
Market Coverage Strategies
Company
Marketing Market
Mix
A. Undifferentiated Marketing
Company
Marketing Mix 1 Segment 1
Company
Segment 2
Marketing Mix 2
Company
Segment 3
Marketing Mix 3
B. Differentiated Marketing
Segment 1
Company
Marketing Segment 2
Mix
Segment 3
C. Concentrated Marketing
Choosing a Market-Coverage Strategy
Company
Resources
Product/Service
Variability
Product’s Stage
in the Product Life Cycle
Market
Variability
Competitors’
Marketing Strategies
Step 3. Positioning for Competitive
Advantage
• Product’s /Service’s Position - the place the

product/services occupies in consumers’ minds
relative to competing products; i.e. Volvo positions
on “safety”.
• Marketers must:
– Plan positions to give products/services the greatest advantage
– Develop marketing mixes to create planned positions
Search for Competitive Advantage in Services
Requires Differentiation and Focus
• Intensifying competition in service sector threatens
firms with no distinctive competence and
undifferentiated offerings
• Slowing market growth in mature service industries
means that only way for a firm to grow is to take share
from competitors
• Rather than attempting to compete in an entire
market, firm must focus efforts on those customers it
can serve best
• Must decide how many service offerings with what
distinctive (and desired) characteristics
Basic Focus Strategies for Services
BREADTH OF SERVICE OFFERINGS

Narrow Wide
Unfocused
Service (Everything
Many Focused
NUMBER for everyone)
OF MARKETS
SERVED
Fully Focused
Market
(Service and
Focused
Few market focused)
Source: Robert Johnston

Focus strategies
• Focus means providing a relatively narrow
product mix for a particular segment – a group
of buyers who share common characteristics,
needs, purchasing behavior or consumption
patterns
• Market focus is extent to which a firm serves
few or many markets
• Service focus is extent to which a firm offers
few or many services.
Focus strategies
• Fully focused company concentrates on narrow
market segment and provides a very limited range
of services.
• Market-focused company concentrates on narrow
market segment and provides a wide range of
services.
• Service focused company concentrates on broad
market segment and provides a very limited range
of services.
• Unfocused company concentrates on wide market
segment and provides a wide range of services.
Four Principles of Positioning Strategy
1. Must establish position for firm or product in

minds of customers
2. Position should be distinctive, providing one
simple, consistent message
3. Position must set firm/product apart from
competitors
4. Firm cannot be all things to all people--must
focus
Positioning strategy
• What does our firm currently stand for in minds of
current and prospective customers?
• What customers do we serve now and which ones
would we like to target for the future?
• In each instance how do our service offerings
differ from those of competition?
• How well do customers in chosen target market
segment perceive each of our service offerings as
meeting their needs?
• What changes do we need to make to strengthen
our competitive position?
Uses of Positioning in
Marketing Management
• Understand relationships between products and markets
– compare to competition on specific attributes
– evaluate product’s ability to meet consumer
needs/expectations
– predict demand at specific prices/performance levels
• Identify market opportunities
– introduce new products
– redesign existing products
– eliminate non-performing products
• Make marketing mix decisions, respond to competition
– distribution/service delivery
– pricing
– communication
Step 3. Positioning for Competitive
Advantage: Strategies
Product Product
Class Attributes
Away from Benefits

Competitors G Offered
H
C
D
Against a E
B
Usage
Competitor F
Occasions
Users
Developing a
Market Positioning Strategy
- Size Define, Analyze
MARKET - Composition
ANALYSIS Market Segments
- Location
- Trends
Select
Target Segments
To Serve
INTERNAL - Resources
Marketing
- Reputation Articulate
ANALYSIS Desired Position Action
- Constraints
in Market Plan
- Values
Select Benefits
to Emphasize
to Customers
- Strengths
COMPETITIVE - Weaknesses Analyze
ANALYSIS - Current Possibilities for
Positioning Differentiation
Source: Adapted from Michael R. Pearce
Positioning of Hotels in Belleville:
Price vs. Service Level
Expensive
Grand
Regency
PALACE
Shangri-La
High Moderate
Service Atlantic Service
Sheraton
Italia
Castle
Alexander IV
Airport Plaza
Less Expensive
Positioning of Hotels in Belleville:
Location vs. Physical Luxury
High Luxury
Regency
Grand
Shangri-La
Sheraton
PALACE
Financial Shopping District Inner
District and Convention Centre Suburbs
Castle Italia
Alexander IV
Atlantic
Airport Plaza
Moderate Luxury
Steps to Choosing and Implementing
a Positioning Strategy
• Step 1.
Identifying a set of possible competitive
advantages:
Competitive Differentiation.
• Step 2. Selecting the right competitive

advantage.
• Step 3. Effectively communicating and

delivering the chosen position to the market.
Developing Competitive
Differentiation
Product Service
Areas for Competitive

Differentiation
Personnel Image
Selecting the Right Competitive
Advantages
Important
Profitable Distinctive
Criteria
for
Determining
Which
Differences
Affordable to Superior
Promote
Preemptive Communicable
service blueprint
Service Blueprint
Service Blueprint
• Service blueprint is a picture or map that accurately
portrays the service system so that different people
involved in providing it can understand and deal with
it objectively regardless of their individual point of
view .
• Particularly useful at design and redesign stages of
service development.
• It provides a way to break the service into logical
components and to depict the steps or tasks in the
processes, the means by which they are executed and
evidence of the service as consumer experiences it.
Service Mapping/Blueprinting
A tool for simultaneously depicting the service
process,
the points of customer contact
and the evidence of service from the customer’s
point of view.
Process
Service Points of Contact

Mapping
Evidence
Blueprint components
• Basic components of Service Blueprint are:
Customer actions
“Onstage” contact employee actions
“Backstage” contact employee actions
Support processes
Blueprint components
• Customer actions: it includes steps, choices, activities and
interactions that customer performs in the process of
purchasing, consuming and evaluating the service
• Onstage employee actions: steps and activities that the

contact employees performs that are visible to the customer.
• Backstage employee actions: steps and activities that occur

behind the scene to support onstage activities.
• Support processes: covers the internal services, steps and

interactions that take place to support the contact employees
in delivering the service.
Service Blueprint Components
CUSTOMER ACTIONS
line of interaction
“ONSTAGE” CONTACT EMPLOYEE ACTIONS
line of visibility
“BACKSTAGE” CONTACT EMPLOYEE ACTIONS

line of internal interaction
SUPPORT PROCESSES
Service Blueprint Components
• Line of interaction: direct interactions b/w the
customer and organization.
• Line of visibility: this line separates all service
activities that are visible to the customers
from those that are not visible.
• Line of internal interaction: separates contact
employees activities from those of other
service support activities and people.
• Physical evidence
Express Mail Delivery Service
Truck Truck
Packaging Packaging
Forms Forms
EVIDENCE
CONTACT PERSON CUSTOMEPHYSICAL
Hand-held Hand-held
Computer Computer
Uniform Uniform
Customer Customer Receive

Calls Gives Package
Package
(Back Stage) (On Stage) R
Driver
Picks Deliver
Up Pkg. Package
Customer
Service
Order
Airport Fly to
Dispatch Unload Load
Driver
Receives Sort Fly to
& On
& Loads Center Destinatio
SUPPORT
Sort
PROCESS
Load on Truck
Airplane
n
Sort
Packages
Overnight Hotel Stay
Bill
EVIDENCE
CUSTOMER PHYSICAL
Desk
Hotel Cart for Desk Elevators Cart for Room Menu Delivery Food Lobby
Exterior Bags Registration Hallways Bags Amenities Tray Hotel
Parking Papers Room Bath Food Exterior
Lobby Appearance Parking
Key
Arrive Give Bags Call Check out
Go to Receive Sleep Receive
at to Check in Room Eat and
Room Bags Shower Food
Hotel Bellperson Service Leave
CONTACT PERSON
SUPPORT PROCESS (Back Stage) (On Stage)
Greet and
Process Deliver Deliver Process
Take
Registration Bags Food Check Out
Bags
Take
Take Bags Food
to Room Order
Registration Prepare Registration

System Food System
Building a Service Blueprint
Step 1 Step 2 Step 3 Step 4 Step 5 Step 6
Identify Identify Map the Map Link Add

the the process contact customer evidence
process to customer from the employee and contact of service
be blue- or customer’ actions, person at each
printed. customer s point of onstage activities to customer
segment. view. and back- needed action
stage. support step.
functions.
Application of Service Blueprints
• New Service Development

• concept development
• market testing
• Supporting a “Zero Defects” Culture
• managing reliability
• identifying empowerment issues
• Service Recovery Strategies
• identifying service problems
• conducting root cause analysis
• modifying processes
Blueprints Can Be Used By:
• Service Marketers • Human Resources

– creating realistic customer – empowering the human
expectations element
• service system design • job descriptions
• promotion • selection criteria
• appraisal systems
• Operations Management
– rendering the service as
promised • System Technology
• managing fail points – providing necessary tools:
• training systems • system specifications
• quality control • personal preference databases
Service Environment
Service Environment
Servicescape
• Physical elements of a service.
• Physical facility- exterior and interior of a facility with

all of its furnishings, equipment and décor
• Location- physical location of the facility.
• Ambient conditions- intangible elements of a service

environment such as sound, temperature.
• Interpersonal conditions- interaction b/w customers

and service personnel
Impact of Service Environment
• Purchase decision
• Expectations
• Service quality evaluations
• Employee attitudes and work motivation
Response Moderators
• Cognitive Response-
refers to an individual’s knowledge structure and beliefs
created by contact with a person, place or thing.
• Affective response-
refers to an individual’s feelings and emotions that are
created by contact with a person, place or thing.
• Physiological response-
refers to changes in individual’s physiological state due to
contact with a person, place or thing.
Cognitive Responses
• Cognitive Responses to the environment influence a
person’s beliefs about a service business, their
employees, and what to expect from the service in
terms of technical and functional service quality.
Affective Responses
• Physical environment impact emotions on two
dimensions: pleasure and arousal
• Pleasure dimension
refers to the degree a person feels good, joyful, happy or
satisfied with environment.
• Arousal dimension
refers to the degree a person feels excited, stimulated,
alert or active in the environment.
Service organiations should strive to make the

environment as pleasant as possible for both employees
and customers.
Affective Responses
Arousing
Distressing Exciting
Unpleasant Pleasant
Gloomy Relaxing
Sleeping
Physiological Responses
• Ambient conditions are atmospheric conditions of a
service such as temperature of the facility,
sounds and smells. These conditions affect people
physically.
• The physical reaction will create either a cognitive
reaction or an emotional reaction or both.
Physiological Responses
Cognitive
Physiological Behavioral
Affective
Servicescape Behaviors and
Environment
• Behaviors
– Approach behaviors are desire to stay, explore or
work in an environment.
– Avoidance behaviors are desire not to stay,
explore or work in an environment.
– In terms of consumer behavior Approach
behaviors are desire patronize a firm and a
willingness to return to a business for future
purchases.
– Employees approach behavior include a desire to
work and a positive attitude.
Behaviors
• Employees avoidance behaviors include excessive
absenteeism and a negative work attitude.
• Such behaviors can be detrimental to fellow
employees and customer dissatisfaction.
• Avoidance and approach behaviors are affected by
the quality of social interaction that occurs in the
service encounter.
• Employee-customer, employee-employee and
customer-customer interactions all have a potential
to create avoidance or approach behavior.
Environmental Stimuli
• Environmental Stimuli
– Arousal seekers- individuals who enjoy high levels of
environment stimulation
– Arousal avoiders- individuals who prefer low levels of
environment stimulation
– Environmental stimuli screeners- individuals who can
experience a high level of environment stimuli and not
be affected
– Environmental stimuli nonscreeners- individuals who
are affected by small amounts of environment stimuli
Maximizing the Service Environment
1. Identify the firm’s operational position.

2. Identify the appropriate servicescape position.
3. Identify desired behaviors to be elicited by the
servicescape.
4. Identify servicescape factors that will enhance
desired behaviors.
Positioning Servicescape Focus
Cost Efficiency
Firm
Customers
Service
Quality (Functional) Customization
Designing the Service Environment
• Location
• Physical facility
• Ambient conditions
• Interpersonal conditions
Choosing the Location
• Operational Position
• Merchantability
• Traffic interception
• Cumulative competitive attraction
• Competitive compatibility
• Accessibility
Physical Facility
• Exterior Appearance • Interpersonal Factors
• Interior Appearance • Employee Appearance
• Ambient Conditions • Employee Behavior
Cost Efficiency: Maximize efficiency & productivity

Customization: Focus on customers
Technical SQ: Maximize quality of technical output
Functional SQ: Maximize quality of customer interaction
Perceptions of Crowding
• Environmental cues
• Shopping motives
• Constraints
• Expectations of crowding
Impact of Crowding
Short Term Long Term
• Affective reactions • Less confidence in
• Reduce browsing purchase decision
• Adjust purchases • Dissatisfied with
• Reduce interaction with experience
employees • Reduce image of firm
• Modify future purchase
intentions
Strategies to Reduce Impact of
Crowding
Operations Management:
1. Modify layout of facility.
2. Reduce capacity of facility.
3. Control number of customers in facility.
4. Hire more customer contact personnel.
Perceptions Management:
1. Use signs.
2. Modify ambient conditions.
Entertainment Services
• Spectator Sports
• Recreational Theme Parks
Sports Purchase Factors
• Past experience
• Physical facility
• Ambient conditions
• Social acceptability of the sport
• Level of excitement
• Level of involvement
• Presence of situation
involvement
Theme Parks
• Importance of servicescape
– Physical facility
– Ambient conditions
– Crowding
• Environmental stimuli
– Arousal seekers
– Environmental stimuli screeners
service product
Core Products and Supplementary
Services
• Most firms offer customers a package of benefits:

– core product (a good or a service)
– supplementary services that add value to the core
• In mature industries, core products often become
commodities
• Supplementary services help to differentiate core
products and create competitive advantage by:
– facilitating use of the core service
– enhancing the value and appeal of the core
Developing Service Products:
Core and Supplementary
Elements
Service Design Involves Matching
Marketing Concept with Operations
Concept
Corporate Objectives
and Resources
Marketing Assets Operating Assets
(Customer Base, Mkt. Knowledge, (Facilities/Equipment, IT Systems,
Implementation Skills, Brand Reput.) People, Op. Skills, Cost Structure)
Service Marketing Concept

Service Operations Concept
•Benefits to customer from core/
•Nature of processes
supplementary elements, style,
•Geographic scope of ops
service level, accessibility
•Scheduling
•User costs/outlays incurred •Facilities design/layout
•Price/other monetary costs •HR (numbers, skills)
•Time •Leverage (partners, self-service)
•Mental and physical effort •Task allocation: front/backstage
•Neg. sensory experiences Service Delivery staff; customers as co-producers
Process
Core and Supplementary Product Design:
What Do We Offer and How Do We Create and Deliver It?
Supplementary Delivery Concept

services offered For Core Product
and how created Scheduling Process
and delivered
Core
Service Customer
Level Role
What Should Be the Core and Supplementary Elements
of Our Service Product?
• How is our core product defined and what supplementary
elements currently augment this core?
• What product benefits create the most value for
customers?
• Is our service package differentiated from the competition
in ways that are meaningful to target customers?
• What are current levels of service on the core product and
each of the supplementary elements?
• Can we charge more for higher service levels on key
attributes (e.g., faster response, better physical amenities,
easier access, more staff, superior caliber personnel)?
• Alternatively, should we cut service levels and charge less?
The Flower of Service:
Categorizing Supplementary Services
Information
Payment Consultation
Billing Core Order-Taking
Exceptions Hospitality
KEY:
Facilitating elements Safekeeping
Enhancing elements
Facilitating Services - Information
Customers often require

information about how to
obtain and use a product or
Core service. They may also
need reminders and
documentation
Facilitating Services - Order-Taking
Many goods and services

must be ordered or reserved
in advance. Customers need
Core
to know what is available and
may want to secure
commitment to delivery
Facilitating Services - Billing
“How much do I owe you?”

Customers deserve clear,
Core
accurate and intelligible
bills and statements
Facilitating Services - Payment
Customers may pay faster

and more cheerfully if you
Core
make transactions simple
and convenient for them
Enhancing Services - Consultation
Value can be added to

goods and services by
Core
offering advice and
consultation tailored to
each customer’s
needs and situation
Enhancing Services - Hospitality
Customers who invest time

and effort in visiting a
business and using its
Core services deserve to be
treated as welcome guests
(after all, marketing invited
them there!)
Enhancing Services - Safekeeping
Customers prefer not to

worry about looking after
the personal possessions
that they bring with them
Core
to a service site.
They may also want delivery
and after-sales services for
goods that they purchase
or rent
service recovery
SERVICE RECOVERY
Service Recovery
Service Recovery refers to action taken by an
organisation in response to a service failure.
Failure can be due to reasons like:
• Service may be unavailable
• Service may be delivered too late or too
slowly.
• Employees may be rude or uncaring.
Customer Response Following Service
Failure
Service Failure
Take Action Do Nothing
Switch Providers Stay with Provider
Complain to Complain to Complain to

Provider Family & Friends Third Party
Switch Providers Stay with Provider

Advantages of Service Recovery
Strategy
• Can increase customer satisfaction and
generate loyalty
• Can generate positive word of mouth
• It can be used as improve service on
continuous basis.
• Learning from service recovery experiences
can increase the likelihood of “doing it right
the first time”.
Service Recovery Strategies
Service
Recovery
Strategies
Service Guarantees
• guarantee = an assurance of the fulfillment of a

condition (Webster’s Dictionary)
• for products, guarantee often done in the form of

a warranty
• services are often not guaranteed

–cannot return the service
–service experience is intangible
Characteristics of an Effective Service
Guarantee
Unconditional
 The guarantee should make its promise unconditionally -
no strings attached.
Meaningful
 It should guarantee elements of the service that are
important to the customer.
 The payout should cover fully the customer's
dissatisfaction.
Easy to Understand and Communicate
 For customers - they need to understand what to expect.
 For employees - they need to understand what to do.
Easy to Invoke and Collect
 There should not be a lot of hoops or red tape in the way
of accessing or collecting on the guarantee.
Why a Good Guarantee Works
• forces company to focus on customers

• sets clear standards
• generates feedback
• forces company to understand why it failed
• builds “marketing muscle”

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An Integrated Communications Program

Service Outcome Price

Integrated Communications Program

All communications should be integrated

• Who is our target audience?

• Enhance customer satisfaction

• Reduce cognitive dissonance

Personal Publicity & Instructional Corporate

Customer Press Interior decor

Word-of-mouth Prize Trade Shows, Software

Media-initiated Voice mail Uniforms

Key: * Denotes communications originating from outside the organization

Definition: A set of assets and liabilities linked to a

Uncontrolled brand communications

Customer’s Experience Meaning Attached

Source: Adapted from L. L. Berry ( Fig. 1)

• Contest and Sweepstakes • Premiums

• Most common form of distribution growth

Operational Position --- Growth Strategy

Technical Service Quality Multi-segment

Functional Service Quality Multi-service

• Identify market segments

Dr. Raj Agrawal

Progressively active role for the State in the

• Rest of the industrial field open to private

• After the adoption of the Constitution and the

– Progressively predominant and direct

– Private sector to develop on the principle of

– Public sector: All industries of basic and

i) Set of industries the future development of

• iii) Rest of industries left to the initiative and

• Stress the role of cottage and village and small

• Disparities in levels of development between

• Certain structural distortions called for policy

• Within the small scale sector, a tiny sector was also

• Compulsory export obligations, merely for

• In the areas of price control of agricultural and

• Formulated wrt the Industrial Policy Resolution of 1956 to

• (vii) Promotion of economic federalism through equitable

• (viii) Consumer protection against high prices and bad

• Govt . recognizes the need for

• Sound policy framework encompassing

• The spread of industrialization to backward areas

• Government will provide enhanced support to the

• Foreign investment and technology collaboration

Government will endeavor to abolish the

• The Government will ensure that the public sector

• Government will fully protect the interests of

• Workers cooperatives will be encouraged to

• The major objectives of the new industrial policy

• Need to preserve the environment and ensure the

• Government’s policy will be continuity with

• In pursuit of the above objectives, Government

• Foreign Technology Agreements:

• Industrial Policy should not be about:

Fiscal • Tax Incentives for R&D Expenditure

• In developed economies, employment is dominated by

 Services cannot be inventoried

• Stress tangible cues

Service delivery and customer satisfaction

 It is difficult to synchronize supply and

• Manipulate both demand and supply to

Customers participate in and affect