Services

Management Science II

Dr. S.Bharadwaj

MODULE 1 Services – 4 Ps 4 Ps •

What are the 4 Ps of Marketing?

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Who coined the term?

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Why are 4 Ps important?

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4 Ps are Product, Price, Promotion & Place

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McCarthy coined the term

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Marketing is all about management of 4 Ps

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4 Ps define an offering’s positioning

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What is positioning?

4 Ps – Product •

We use the term “product” in a generic way, “offering” is a better term

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What are some main differences between a physical product and a service?

4 Ps – Product Vs. Service •

Service is intangible – no ownership of anything at end

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Service is inseparable from production

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Hence, not possible to store it

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Cannot inventory it

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Management Science II

Dr. S.Bharadwaj

ence time is important •

Services need to be delivered real time

Customers involved in production of service Achieving a standardised offering is hard •

There is variability

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Services maybe high on credence qualities

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Distribution possible through other sources

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Importance of the human element greater

4 Ps – Product •

Okay, so how do some of these differences impact the first P?

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Which ones do you think affect the first P more?

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It is very important to “manage the evidence” “tangibilise the intangible”

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Manage the servicescape

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How?

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First, see whether service has any tangible parts at all

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Then, work on enhancing tangible cues and supplying new ones, is possible

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Thus, doctor’s office should look neat, clean, hygienic

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Professor’s room should look untidy, full of papers and books and random material!

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Beggar should look unkempt and dirty!

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It is also important to have supplementary services – why?

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Since they may be necessary for the performance of the main service E.g. Car park in hotel

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Services cannot be inventoried

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Management Science II

Dr. S.Bharadwaj

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Thus, you go to a specialist, see 20 people waiting

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What does the nurse tell you?

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You go to service your bike

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Waiting room with TV, newspapers

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Same case with barber

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Thus, without supplementary services, will lose customers

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Hence, e.g., resort needs to have plenty of attractions

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Must give total customer experience, the entire package is important

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Hence size becomes important

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Disneyland has 100’s of attractions

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IIT’s are huge, though small by US universities’ comparison

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It is no coincidence that the world’s No. 1 co is a service co

It is also important to have a service blueprint •

A layout of what happens in the service production process

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Factory has one, here it is more important, why?

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It is important to carefully check the weak links Plus, people are part of the “product”, in a sense Also, extreme efforts need to be taken in order to standardise service offering

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After all, customers pay the same, hence, expect equal treatment

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How to standardize

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4 Ps - Price •

Which service-product differences pertain to price?

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Services are heterogenous and price comparison becomes hard

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e.g. life insurance

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Retailer displays prices of Surf, Rin, Tide

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Plus, service provider gives only “guesstimate”

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E.g. X has severe stomach ache, can Dr. give him exact estimate?

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Management Science II

Dr. S.Bharadwaj

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Customer needs vary, hence price comparisons are harder still

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Price may be a cue for quality

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Unique models possible e.g. Annapoorna in Singapore, KL

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What are the three common approaches to pricing decisions?

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Cost-based, competition-based and demand-based pricing

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Let us study each briefly

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Some example of each?

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Cost-based pricing is used by say us in special programmes

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However, there are special problems here, like?

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Estimating costs is hard, time is hard to estimate

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Value is different to the customer e.g. tailoring a suit vs. shorts

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Demand-based pricing is also hard, since there are ethical concerns

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What are these and what to do?

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When the Cbe bomb blast happened, auto drivers charged Rs. 500 for 5 kms!!

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Companies cannot do this, hence, shift demand to other time, wherever possible

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Example would be?

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Competition-based pricing is quite popular

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Though I suspect that pricing will be done using all 3

Ps - Place •

What are some relevant differences here?

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What can be done about these?

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In a sense, services are easier to distribute, since logistical nightmare is not present to that extent

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Standardisation is a problem however

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Plus service distribution, delivery and production all overlap

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Hence, “place” overlaps to some extent with “product”

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Management Science II

Dr. S.Bharadwaj

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But not fully

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PO is present in 1000’s of places

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PDS is quite poor

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NIIT has hundreds of locations

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There are unique aspects like franchising, which work to Marketer’s advantage

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Who pioneered this?

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What is the product (good) equivalent?

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Plus in services, have the option of online delivery in many cases

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I ke software

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so free medical advice

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Not so haircut!

4 Ps – Promotion •

Promotion now is termed IMC

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What are some differences that are relevant here?

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Use attractive, vivid information since no “product” is there

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Hence, holiday resorts use excellent imagery

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As do airline ads

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Focus on the tangibles

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See above

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Feature employees/users

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Again, one finds this in several airline ads, educational institutions ads

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If possible, smiling students, professors all giving the image of one happy family

Summary •

Services have certain unique elements

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These have to be taken into account while managing ]4 Ps

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Usually a problem

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However, sometimes also an advantage 5

Indian Institute of Technology Madras