-Marketing mix for services -Types of services -Place, promotion, and price [SLIDE 1] The marketing mix is the same at the high level, whether for goods or for services. However, the unique characteristics, described in the previous lesson, mean that marketing becomes more challenging. While the four components of product, place, promotion, and price remain the same, there are different ways of defining those factors in services. [SLIDE 2] A product, as has been defined in this course, is everything a person receives in an exchange. There are four key areas that help to describe how defining a product is different for services: -Services as a process -Core and supplementary service products -Customization/standardization -The service mix [SLIDE 3] In the case of services, they are intangible so what is often used to supply services is a process. There are two broad categories of things used in a services process: people and objects. Sometimes the object is physical and sometimes it is intangible. How people and objects are combined help to define the process. There are four categories of service processes: -People processing: services directed at a customer. Examples: transportation, health care. -Possession processing: services directed at a customer’s physical possession. Examples: lawn care, veterinary. -Mental stimulus processing: services directed at minds. Examples: education, theater. -Information processing: use technology or brainpower directed at a customer’s assets. Examples: insurance, business consulting. Customers experiences are different for the different types of processes, so marketing strategies must be modified. For instance, people processing requires a physical location, such as an aircraft or a physician offices, while a possession process usually does not require a person be at a special facility for service. Marketing for the first requires a different message, and more of a focus on the facility, than does the latter. [SLIDE 4] Core services are the most basic benefit the consumer is buying. Supplementary services are the group of services that support or enhance the core service. A hotel demonstrates the two types of service. The core service is the overnight rental of a hotel room. Some examples of supplementary services found at hotels are: -Room service -Room phone -Parking -Reservations -Meals In a competitive environment, the core services can become a commodity and face price pressures. Companies can modify their product offers both directions. Some minimize supplementary services in order to provide lower prices. Other firms may choose to extend supplementary services in order to support a higher price. [SLIDE 5] Services can be standardized or they can be customized. Customized products can support higher prices. However, mass market customization can be expensive and slow services. Each organization must decide on the balance between standardization and customization. One concept gaining traction is mass customization, a strategy that uses technology to deliver customized services on a mass basis. One example is in mobile banking. A standard app can be installed on a smart phone, and the bank can customize offerings depending on the demographic information of the user. [SLIDE 6] Just as with goods manufacturers, most service organizations offer more than a single service (product). The same way that other products firms must ensure the product mixes make sense, a service organization should analyze how every service supports the firm’s core goals. The product life cycle also works for services. A service strategy must look at the target market, find services to introduce, which services to maintain, and what services to eliminate. [SLIDE 7] Place (distribution) matters for all products. In the B2C market, there are five key aspects to service distribution: -Convenience: how easy it is to find the service. -Number of outlets: the number of outlets should meet, but not exceed, the target market’s needs. -Directly or indirectly: the Internet and franchising are ways to directly provide services. Providing hotel rooms and airfare on a third-party site is an example of indirect distribution. -Location: this is often the most critical factor for many services, impacting convenience and defining the number of outlets. -Scheduling: time-dependent services, such as airfare and physician’s offices, need to focus on scheduling in order to provide appropriate services. [SLIDE 8] As mentioned in the previous lesson, services are harder for businesses and consumers to evaluate because they are intangible. That means there are more challenges in promoting services than there are for goods. Four primary promotion strategies are: -Stressing tangible cues: focusing on tangibles, such as the quality of a hotel room, helps provide concrete images of the service. -Using personal information sources: word-of-mouth communications, customers in ads, and the use of influencers. -Creating a strong organizational image: the appearance of service facilities and employees are ways to create a strong image. -Engaging in postpurchase communications: follow-up activities after the exchange can, just as with goods, improve customer perception and retention. [SLIDE 9] Pricing concepts are similar to those discussed in previous lessons when we focused on goods. However, there are two special pricing challenges for service. The first is deciding on the unit of consumption. For instance, do you charge based on final product (a haircut) or the time used (tanning salon). Services that include goods can be priced on those, such as at restaurants, where the cost of tables, chairs, and other service components are added into the price of the food served. The second issue is to decide on bundling or per-element (unbundled) pricing. For instance, over the last decade, the airlines have moved from a bundled price for all the services (travel, seat, food, luggage) to a per-element pricing strategy. Furniture stores have always used unbundled pricing, providing a separate charge for delivery. On the other side, tax accounting services tend to charge for a finished tax return, not a different price for each form. As pricing is complex, marketing and sales personnel should create performance objectives. Three of the most used categories of objectives are: -Revenue-oriented: maximizing surplus income over costs. Most manufacturing organizations use this, but it can be difficult to determine some service costs. -Operations-oriented: matching supply and demand to prices. Airlines and hotels raise and lower prices based on demand. -Patronage-oriented: maximizing the number of customers using the service. Prices vary with different market segments, such as senior and student discounts.