Service Marketing Solved Paper May 2017, Dibrugarh University B.Com 6th Sem CBCS Pattern

 Service Marketing Solved Question Paper May 2017
2017 (May)
COMMERCE (Speciality)
Course: 403 (Service Marketing)
Time: 3 hours
The figures in the margin indicate full marks for the questions
Full Marks: 80
Pass Marks: 24

 1. State whether the following statements are True or False:      1x8=8

a) Affluence in a society and growth in services are not correlated.

Ans: False, High income people more services

b) Services are homogeneous whereas goods are heterogeneous.

Ans: False, Opposite

c) When a service company offers only one package across its market, it is called differentiated marketing.

Ans: False

d) The service product is a bundle of features and benefits.

Ans: True

e) The price of stock broking service is salary.

Ans: False, Brokerage

f) Quality is a key element in the service business.

Ans: True

g) A modified marketing mix consisting of four Ps can be used as comprehensive marketing strategy.

Ans: False, 7 P’s

h) Marketing segmentation is to divide the homogeneous market into heterogeneous segments.

Ans: False, opposite will be the answer

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2. Write short notes on any four of the following: 4x4=16

a) Service marketing segmentation.

Ans: Market segmentation is the sub- dividing of market into homogeneous sub section of customers, where any sub section may conceivable be selected as a market target to be reached with a distinct market mix. The marketer has to identify his targeted customers (segments). For example, a motorcycle manufacturing company has to identify their market segments, like female officers, teenage college students, and middle aged customers. After identifying the segments, the marketer (manufacturer) has to understand their tastes and expectations. In the case of female customers, they need not use much power full vehicles, like that the teenagers demand most powerful and stylish vehicles and the middle aged customers need vehicles having more mileage.

Benefits of market segmentation

No one can satisfy all people all time, can satisfy some people all the time or all people for some time. This concept is reflected in market segmentation:

1. Facilitates proper choice of target market

2. Helps distinguish one customer group from another within a given market

3. Facilitates effective tapping of the market, adapting the offer to the target

4. The “divide and rule” concept as a strategy of dividing markets for conquering them

5. Helps crystalise the needs of the target buyers and bring out more predictable responses from them, helps develop marketing programs on a more predictable base, helps develop marketing offers that are most suited to each group

6. Helps specialization required in products/services, distribution, promotion, and pricing for matching the customer group and developing marketing offers and appeals that match the needs of such groups.

7. Makes marketing effort more efficient and economic, helps to identify less satisfied segments and concentrate on them to improve level of satisfaction

8. Helps to concentrate efforts on the most production and profitable segments instead of frittering them away over irrelevant or unproductive or unprofitable segments

b) Physical evidence.

Ans: Physical evidence is another important variable to be considered in the context of services marketing. Since a service is intangible, it is important for the client to search for evidences which enables him to evaluate the, service. Physical evidences are those tangible clues which customers may receive during the process of receiving the service. The customers evaluate the worthiness of the service with the physical evidences they receive. Physical evidences can be successfully employed to describe the service-product and its distinguishing qualities.

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c) Expanded marketing mix.

Ans: The services marketing mix is an extension of the traditional 4-Ps framework. The essential elements of product, promotion, price and place remain but three additional variables – people, physical evidence and process – are included to 7-Ps mix. These three additional P’s of service marketing are called, Extended P’s of service marketing. The need for the extension is due to the high degree of direct contact between the service providers and the customers, the highly visible nature of the service process, and the simultaneous production and consumption. While it is possible to discuss people, physical evidence and process within the Original-Ps framework (for example people can be considered part of the product offering) the extension allows a more thorough analysis of the marketing ingredients necessary for successful services marketing. The additional Ps have been added because today marketing is far more customer oriented than ever before, and because the service sector of the economy has come to dominate economic activity in this country. These 3 extra Ps are particularly relevant to this new extended service mix. The service marketing mix comprises of the 7’ P’s. These included:

Ø  People.

Ø  Process.

Ø  Physical Evidence.

d) Marketing of education.

Ans: A number of classification schemes have been developed to classify the whole array of services according to some chosen variables. One of the simplest schemes classifies services as consumer, intermediate and industrial service. Education is a service that is geared primarily to the consumer market, therefore it can be classified as a consumer service rather than an intermediate or industrial service, though packages of industrial training are also designed for the organisational customers. On the basis of the way in which services have been bought, education, depending upon the type and level can be classified both as a shopping service and as a Speciality service. Swan and Pruden have suggested that establishing whether service is bought for instrumental motives (i.e. as a means to an end) or an expressive motive (as an end in itself) provides a useful framework for service designers. For majority of customer’s education may fulfill the instrumental function, but there is always a category of customer from whom education and the pursuit of knowledge are expressive motives.

Another classification scheme categorises services as equipment based and people based services, depending upon which resource is primarily used in the production of the service. By its very nature, education is essentially a people based service though some service delivery systems may make heavy use of technology and equipment. Services have also been classified on the level of personal contact as low contact or high contact services.4 Recent developments in open and distance learning systems have successfully countered the challenge of constantly maintaining high levels of contact, by creating specialised kinds of user friendly course material and using multi-media technology to gain access to students. Shostack, who in her studies has stressed the intangibility characteristic of services has classified services on the bases of dominance of tangibility/intangibility, along a continuum of a pure tangible product with high tangibility dominance to a pure service with intangibility dominance. Accordingly, education can be classified as a pure service with dominant intangibility content.

e) Micro-environment for services.

Ans: THE MICRO ENVIRONMENT: This environment influences the organization directly. It includes suppliers that deal directly or indirectly, consumers and customers, and other local stakeholders. Micro tends to suggest small, but this can be misleading. In this context, micro describes the relationship between firms and the driving forces that control this relationship. It is a more local relationship, and the firm may exercise a degree of influence. The microenvironment refers to the forces that are close to the company and affect its ability to serve its customers. In includes the company itself, its suppliers marketing intermediaries, customer markets, competitors, and publics.

1.       The Suppliers: The suppliers of a company are also an important aspect of the microenvironment because even the slightest delay in receiving supplies can result in customer dissatisfaction. Marketing managers must watch supply availability and other trends dealing with suppliers to ensure that product will be delivered to customers in the time frame required in order to maintain a strong customer relationship.

2.       The Marketing Intermediaries: Marketing intermediaries refers to resellers, physical distribution firms, marketing services agencies, and financial intermediaries. These are the people that help the company promote, sell, and distribute its products to final buyers. Resellers are those that hold and sell the company’s product. They match the distribution to the customers and include places such as Wal-Mart, Target, and Best Buy. Physical distribution firms are places such as warehouses that store and transport the company’s product from its origin to its destination. Marketing services agencies are companies that offer services such as conducting marketing research, advertising, and consulting. Financial intermediaries are institutions such as banks, credit companies and insurance companies.

3.       Customers: Another aspect of microenvironment is the customers. There are different types of customer markets including consumer markets, business markets, government markets, international markets, and reseller markets. The consumer market is made up of individuals who buy goods and services for their own personal use or use in their household. Business markets include those that buy goods and services for use in producing their own products to sell. This is different from the reseller market which includes businesses that purchase goods to resell as is for a profit. These are the same companies mentioned as market intermediaries. The government market consists of government agencies that buy goods to produce public services or transfer goods to other who need them. International markets include buyers in other countries and includes customers from the previous categories.

4.       Competitors: Competitors are also a factor in the microenvironment and include companies with similar offerings for goods and services. To remain competitive a company must consider who their biggest competitors are while considering its own size and position in the industry. The company should develop a strategic advantage over their competitors.

5.       Public: The final aspect of the microenvironment is publics, which is any groups that has an interest in or impact on the organization’s ability to meet its goals. For example, financial publics can hinder a company’s ability to obtain funds affecting the level of credit a company has. Media publics include newspapers and magazines that can publish articles of interest regarding the company and editorials that may influence customers’ opinions. Government publics can affect the company by passing legislation and laws that put restrictions on the company’s actions. Citizen-action publics include environmental groups and minority groups and can question the actions of a company and put them in the public spotlight. Local publics are neighborhood and community organizations and will also question a company’s impact on the local area and the level of responsibility of their actions.

f) Non-monetary cost.

3. (a) Explain the different components of service marketing triangle. 11

Ans: Service Marketing Triangle

In the words of Bitner, “Services marketing is about promises. Promises are made and promises are kept to customers. Service triangle is the strategic framework which "reinforces the importance of people in the ability of firms to keep their promises and succeed in building customer relationships"

The services marketing triangle was created to handle the complexity that service marketers face when dealing with intangible products. The service marketing triangle highlights three key players, these are:

·  Company: The management of a company, including full-time marketers and sales personnel. This is enabled through continuous development and internal marketing with their employees.

·  Employees: This includes anyone that is working within close contact of the consumer. They play an integral role within the interactive marketing of service marketing.

·  Customers: Anyone that purchases the service of a company. They are also heavily exposed to the external marketing of a firm.

For marketing to be successful, a marketer should ensure that there is positive interaction between these three players. Furthermore, for this success to be accomplished, three types of marketing must be conducted. These are:

·  External Marketing: Making Promises: Involves communication by a company towards their consumer. This form of communication allows the company to offer their services, and set the expectation of service quality that the client can expect. In service marketing this pays particular attention to physical evidence, such as the appearance of the place of business or appearance of staff.

·  Interactive Marketing: Keeping Promises: Interactive marketing is revolved around the communication that occurs between the client and the service delivery personnel. This is one of the most important parts of successfully utilizing the services marketing triangle, as it is the only time that the client will have face-to-face experience with the company, via the providers.

·  Internal Marketing: Enabling Promises: A more modern addition to the services marketing triangle, internal marketing centres on training employees to the highest standards so they can deliver exceptional service. Without internal marketing, there is a high chance that the client will receive sub-standard service.

For the service marketing triangle to be implemented successfully, all departments of a company must work together to deliver the highest quality of service that is possible. All members of an organisation must be conscious of their role in delivering service quality, and understand what their marketing function is. The concept of service marketing triangle can be easily understood with the help of following diagram:

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(b) Define services. Explain the reasons for the growth of the services sector.     4+7=11

Ans: Meaning of Service: According to the economic point of view a service is an intangible commodity. That is, services are an example of intangible economic goods. A service is any activity or benefit that one party can offer to another that is essentially intangible and does not result in the ownership of anything. Its production may or may not be tied to physical product.

Definition of Services

According to American Marketing Association services are defined as “activities, benefits or satisfactions which are offered for sale or provided in connection with the sale of goods.”

According to Philip Kotler and Bloom services is defined as “any activity or benefit that one party can offer to another that is essentially intangible and does not result in the ownership of anything. Its production may or may not be tied to a physical product.”

Reasons for growth of Service market in India

Phenomenal growth has been witnessed in the service sector in the past one decade. Both the developed as well as the developing countries have been making multidimensional efforts to market services in a right fashion. Innovative efforts have been devised both by the public and the private sector organizations to market services. The multi-faceted developments in the service sector and intense competition generated by the well-established multinational and global corporations have been engineering a strong foundation for the application of modern marketing principles in the service marketing. Some of the potential reasons that have encouraged the growth of service sector are:

1.       Increased disposable income: Over the years as the Indian economy has grown the disposable income of masses has also shown an upward trend. Such a trend is also found in the developed as well as the developing countries. Developing countries like ours where the development oriented sector has opened new job opportunities and the liberalization of economy is opening new vistas, service marketing has become even more pertinent. The development of corporate sector makes way for the transformation of industrial economy because as the economy grows masses get an opportunity to earn more and when they earn more, it is quite natural that they want to spend more. The positive developments in the development sector thus open doors for an increase in the disposable income e.g. Theme Parks such as Essel World.

2.       Specialization: Specialization is the end result of the Division of Labour where individuals specialize in their respective fields. The in depth analysis of business shows that in reality it is the specialization and perfection that is driving the global economy. As the level of sophistication in the economic transformation process is increasing, advanced specialization in respective fields is the need of the hour. The organizations have now no option but to promote specialization since this helps them in making possible cost effectiveness. Exports and professionals like the management consultants, legal advisers, financial experts, technocrats play a decisive role in managing the affairs of an organization. Thus it would be right to mention that due to increasing specialization, a new breed of the service generating organizations is emerging, e.g. Tata consultancy agency provide tailor made solutions for top corporate problems. Another example can be of the consultancy services which provide expert guidance to corporate clients.

3.       Upcoming Fashion trends: New development in the corporate culture and the emergence of a well-established services sector has influenced and changed the lifestyles of masses. People are receptive towards the new trends in the fashion that has resulted in the emergence of new tailor made service sectors such as hair dressing saloons, beauty parlour, jogging and fitness centres. It is not only the globalization of the industrial sector but even the globalization and westernization of culture, craze for western living conditions, temperament and values that show a big impact on the society, e.g. professionally organized fitness centres such as Health clubs.

4.       Information Boom: Recent inventions and innovations in the field of communications have bridged the gap in the global markets. It is the developed countries that are making efforts to build a superhighway for communications. The tremendous opportunity generated by new developments in the field of communications has influenced almost all the sectors, specifically the service sector. Dramatic changes have emerged in the advertising, fashion and professional services due to the developments in the information sharing and broadcasting. Example Interest & e-mail.

5.       Market Sophistication: Changes in the information sector is driving the sophisticated changes in the market where customer expectations are all time high. Changing westernized life styles has changed the hierarchy of needs and requirements of the individuals. The living conditions, food habits, the dresses and hair styles are changing. In nut shell the customers today are facing a whole new range of services available to them. Example – Opening up of fast food eating joints such as McDonalds, KFC, Domino’s and family day care are the end results of market sophistication.

6.       Professionalism in Education: Success of any organization more or less depends on the human assets which that organization has, hence the concept of employee reliability and performance orientation is gaining ground. The changing corporate culture advocates the presence of excellence in the work force which can only be achieved by imparting professional knowledge through professionally trained employees. The organizations that impart professionalism and the institutions preparing professionally sound human resources would get a profitable opportunity in this changing scenario. Excellence, perfection, professionalism would be the attractions which would require development of world class educational institutions for almost all the disciplines. Examples, Harvard Business School University of Leeds, IIM figure 1.6. This has encouraged the development of tourism services, hotel services, banking services, insurance services, communication services, entertainment services, educational services Medicare services, consultancy services, and personal care services to gain ground.

4. (a) What are the various customer groups? What are their distinctive characteristics?              6+5=11


(b) Discuss the importance of the study of consumer behaviour in service marketing.     11

Ans: Importance of studying Consumer Behaviour

The consumer is the focus of marketing efforts. The modern concept spells out the real significance of buyer’s Behaviour. The modern marketing management tries to solve the basic problems of consumers in the area of consumption. To survive in the market, a firm has to be constantly innovating and understand the latest consumer needs and tastes. It will be extremely useful in exploiting marketing opportunities and in meeting the challenges that the Indian market offers. It is important for the marketers to understand the buyer behaviour due to the following reasons.

1)      Better Consumer: The study of consumer behaviour enables us to become a better consumer. It will help consumer to take more precise consumption related decisions.

2)      Studying the need of consumers: It helps marketers to understand consumer buying behaviour and make better marketing decisions.

3)      Market Prediction: The size of the consumer market is constantly expanding and their preferences were also changing and becoming highly diversified. So without studying it, marketers cannot predict the future of their business. 

4)      Economic Stability: It is significant for regulating consumption of goods and thereby maintaining economic stability.

5)      Efficient utilisation of resources: It is useful in developing ways for the more efficient utilisation of resources of marketing. It also helps in solving marketing management problems in more effective manner.

6)      Studying consumer’s mood: Today consumers give more importance on environment friendly products. They are concerned about health, hygiene and fitness. They prefer natural products. Hence detailed study on upcoming groups of consumers is essential for any firm.

7)      Consumer Protection: The growth of consumer protection movement has created an urgent need to understand how consumers make their consumption and buying decision.

8)      Studying Consumer’s preference: Consumers’ tastes and preferences are ever changing. Study of consumer behaviour gives information regarding colour, design, size etc. which consumers want. In short, consumer behaviour helps in formulating of production policy.

9)      Market segmentation: For effective market segmentation and target marketing, it is essential to have an understanding of consumers and their behaviour. 

10)   Marketing research: Marketing managers regarded consumer behaviour discipline as an applied marketing science, if they could predict consumer behaviour, they could influence it. This approach has come to be known as positivism and the consumer researcher who are primarily concerned with predicting consumer behaviour are known as positivists.

11)   As the marketing research began to study the buying behaviour of consumers, they soon realized that many consumers rebelled at using the identical products everyone else used, for example in case of purchase of house, interiors, car, and dress material etc. people prefers unique products. Consumer preferred differential products that they felt reflected their own special needs, personalities and lifestyles.

5. (a) What are the determinants of Service Quality? How do they influence service business?   6+5=11

Ans: Dimensions and perspective of Service Quality

The most important service quality model is the SERVQUAL developed by Parasuraman, Zeithaml and Berry. There are five main criteria on the basis of which service quality is determined. They have been arranged in the order of importance as given below:

1. Reliability: This implies the capacity of the service firm to deliver the promised service dependably and accurately. It means that the same service is performed every time, on time, in the same way and without mistakes.

2. Willingness: This refers to the willingness to help customers and provide prompt service. Customers do not like to wait unnecessarily and if it happens it reflects badly on the quality of service. Similarly, in case of service failure, the ability of the firm to respond professionally and quickly can create a good impact on service quality.

3. Assurance: This means the knowledge that the providers possess which enables them to perform the service competently. It also includes courtesy aspects such as politeness and respect for customers. This conveys trust and confidence and generally convinces the customer that the service provider has the customer's best interest at heart.

4. Empathy: It basically means the power of understanding the customer's feelings and needs which allows the server to care for him and provide personal attention to him. Due to this a customer feels that he can approach the server with confidence and has a feeling of security.

5. Tangibles: This includes the overall appearance of the surroundings, equipment, information materials and personnel. This can be visible evidence of the care and attention to details shown by service firm. Service quality has two important implications for the organization providing the service. First, decisions must be made on the basic level of quality, which will be provided to match the quality, which is expected by consumers. Secondly, decisions have to be made on the management of quality over time. These decisions have significant influence on the service offerings in the long term.


(b) What are the tools of Sales Promotion? Explain with examples for any two services. 7+4=11

Ans: Sales promotion consists of all activities other than advertising, personal selling and publicity, which help in promoting sales of the product. Such activities are non-repetitive and one time offers. According to American Marketing Association, sales promotion includes, “those marketing activities other than personal selling, advertising and publicity that stimulate consumer purchasing and dealer effectiveness, such as point of purchase displays, shows and exhibitions, demonstrations and various non-recurring selling efforts not in the ordinary routine.”

The main aim of sales promotion is to increase sales and profits of the firm but it is quite different from personal selling and advertising. In personal selling, customer is persuaded by a sales person face to face. Advertising is a non-personal mass communication media. Sales promotion, on the other hand, is a non-recurring and non-routine method. Its main aim is to supplement and coordinate the personal selling and advertising. It is a supporting and facilitating element of promotional strategy. Sales promotion bridges the gap of advertising and personal selling.

Sales promotion techniques: (a) Rebate (b) Product combination (c) Lucky Draw (d) Contest (e) Discounts

(a) Rebate: Sometimes, the product is made available at special prices less than the original prices for a limited period of time, e.g., recently Coke and Pepsi announced special price of their 500 ml bottles.

(b) Product Combination: Product combination is the bonus items given free with the purchase of a product. For e.g. A milk shakers along with Nescafe, or mugs with Bourn vita or a diary along with a packet of chips. They are effective in getting consumers to try a new product.

(c) Lucky Draw: A firm of purchased of a fixed amount gives a coupon to a customer which entitles them for a lucky draw, e.g., Bikanerwala restaurant in particular season gives lucky draw coupon on purchase of Rs. 200 or more to its customers which entitles them to win exciting prizes like car etc.

(d) Consumer Contests: In these, consumer’ are required to participate in some competitive event involving application of skills or luck and winners are given some rewards. For instance, Golden Harvest, maker of premium bread usually has children drawing competition.

(e) Discounts: These are like price promotion in which certain percentage of price is reduced as discount from the list price, e.g., most of the retailers of garment like Snow White and Shopper’s Stop offer their product at generous discount during a limited period at the end of the season.

(f) Exchange schemes, Money back offers: This is a popular promotional tool employed in the consumer durable market. In the scheme old product is exchanged for new product and also some money back is given to consumers.


Exchange schemes, Money back offers

Akai exchange scheme: The AKAI colour TV (53 cm) was available for a shocking Rs. 5,990. "Bring your old 51 cm or 53 cm colour TV in proper working condition with remote. Take home the Akai: For Rs. 5,990 in exchange". Phil 5-in-one-offer: The offer consisted of Philips TV, two in one, iron, mixer grin (and rice cooker at an attractive price.

Consumer contests The Bombay Dyeing Contest: The company offered over Rs. one crore in prizes in 1 990s. The contest carried 25 first prizes (25 Ambassador cars). Also there were 60,000 other prizes. The entrants had to rank top ten Indian film stars from a series of 32 names. Entrants had to complete a slogan on Bombay Dye Fabrics. A panel of judges decided the winners on the basis of the most Popular ranking and the quality of the slogan.

6. (a) What is market segmentation? Describe how market segmentation can be used for services. 4+7=11

Ans: Market segmentation is the sub- dividing of market into homogeneous sub section of customers, where any sub section may conceivable be selected as a market target to be reached with a distinct market mix. The marketer has to identify his targeted customers (segments). For example, a motorcycle manufacturing company has to identify their market segments, like female officers, teenage college students, and middle aged customers. After identifying the segments, the marketer (manufacturer) has to understand their tastes and expectations. In the case of female customers, they need not use much power full vehicles, like that the teenagers demand most powerful and stylish vehicles and the middle aged customers need vehicles having more mileage.

Benefits of market segmentation

No one can satisfy all people all time, can satisfy some people all the time or all people for some time. This concept is reflected in market segmentation:

1. Facilitates proper choice of target market

2. Helps distinguish one customer group from another within a given market

3. Facilitates effective tapping of the market, adapting the offer to the target

4. The “divide and rule” concept as a strategy of dividing markets for conquering them

5. Helps crystalise the needs of the target buyers and bring out more predictable responses from them, helps develop marketing programs on a more predictable base, helps develop marketing offers that are most suited to each group.


(b) What are the components of the service marketing mix?       11

Ans: Elements of Service marketing mix

Having identified the various features of the framework of service marketing mix, a brief description of each element is attempted in the following paragraphs:

1. PRODUCT (SERVICE PRODUCT): A product is an overall concept of objects or processes which provide some values to customers. Goods and services are sub-categories of product. The term produce is used in a broad sense to denote either a manufactured good or product and a service. Strictly speaking, customers are not buying goods or services but specific benefits and value from the total offering. This total offering to the customer is termed as "offer". Offer represents those benefits that customers derive from the purchase of goods or service.

Flour levels of product are briefly described below:

(i) The core or generic product: The core product represents the basic services of a product. This product is at its basic level. For example, food served in a restaurant, a bed in a hotel room for the night, safety of deposits and loanable funds in a bank.

(ii) The expected product: The expected product consists of the core product together with the minimal purchase conditions which need to be met. For example, in a restaurant, in addition to basic food served, aspects such as cleanliness, timely service, polite and courteous service of bearer, availability of menu and background music are expected. In case of the banking service, apart from the safety of funds invested, customers expect accuracy of accounts, timely service, convenient banking hours, courtesy, carrying out the standing instructions are expected. Customers buying an airline ticket expect a range of additional elements such as comfortable waiting area, prompt inflight service, good quality food, clean toilets and timely arrivals.

(iii) The augmented product: Augmented product refers to offerings (product benefit or services in addition to what customers expect). This concept enables a product to be differentiated from another. For example, though IBM has not got technologically advanced core product, they are praised for excellent customer service. This adds value to their core product in terms of reliability and responsiveness. The augmented product of a restaurant includes sparkling floors, ambience, smart employees, courtesy, music of choice, etc. In the case of banking augmented services may take the form of congenial waiting room, courteous staff with "May I help you" attitude, relationship orientation, quicker service, admission of faults, etc.

(iv) The potential product: Potential product refers to doing everything potentially feasible to hold and attract the customers. The concept of potential product of a restaurant is viewed in terms of a pleasing flower arrangement, manager's word of thanks, readiness to go out of the way to serve, etc. The banking service may include occasional greetings at home, "The how are you Mr. X" culture, surprise gifts, readiness to go out of the way to serve the individual customer, etc. The potential product consists of added features and benefits that may or may not give benefits to the customers. Potential product offers scope for redefinition of the product in order to attract new customers.

2. PRICE: Price plays a significant role in the marketing mix by attracting revenue to the marketer. Pricing decisions are important for determining the value of the service as perceived by the customer building of an image for the service. Price serves as a basis for perception of quality. The pricing strategy should be in tune with the marketing strategy. Pricing strategy should gain competitive advantage for the firm. Generally, firms add a percentage mark up on cost.

3. PROMOTION: Promotion is an important part of the marketing mix for many marketers. The promotion element of the service marketing mix communicates the positioning of the service to customers. Promotion adds tangibility and helps the customer evaluate the service offer. The promotion of services encompasses a number of areas namely:

(a) Advertising

(b) Personal selling

(c) Sales promotion

(d) Public relations,

(e) Word of mouth; and

(f) Direct mail.

4. PLACE: Place in case of services determine where is the service product going to be located. The best place to open up a petrol pump is on the highway or in the city. A place where there is minimum traffic is a wrong location to start a petrol pump. Similarly, a software company will be better placed in a business hub with a lot of companies nearby rather than being placed in a town or rural area. Read more about the role of business locations or Place element.

5. PEOPLE: People is one of the elements of service marketing mix. People define a service. If you have an IT company, your software engineers define you. If you have a restaurant, your chef and service staff defines you. If you are into banking, employees in your branch and their behavior towards customers defines you. In case of service marketing, people can make or break an organization.

Thus many companies nowadays are involved into specially getting their staff trained in interpersonal skills and customer service with a focus towards customer satisfaction. In fact, many companies have to undergo accreditation to show that their staff is better than the rest.

6. PHYSICAL EVIDENCE: Physical evidence is another important variable to be considered in the context of services marketing. Since a service is intangible, it is important for the client to search for evidences which enables him to evaluate the, service. Physical evidences are those tangible clues which customers may receive during the process of receiving the service. The customers evaluate the worthiness of the service with the physical evidences they receive. Physical evidences can be successfully employed to describe the service-product and its distinguishing qualities.

7. PROCESSES: Service process is the way in which a service is delivered to the end customer. Let’s take the example of two very good companies – McDonalds and FedEx. Both the companies thrive on their quick service and the reason they can do that is their confidence on their processes. On top of it, the demand of these services is such that they have to deliver optimally without a loss in quality. Thus the process of a service company in delivering its product is of utmost importance. It is also a critical component in the service blueprint, wherein before establishing the service, the company defines exactly what should be the process of the service product reaching the end customer.

7. (a) How do you understand a tourism offer? Explain the marketing components of a tourism service. 5+7=12

Ans: Marketing in tourism is the systematic and coordinated execution of business policy by tourist undertakings. The tourist undertakings may be private or state owned at local, regional, national and international levels. In the words of Burkart and Medlick "tourism marketing activities are systematic and coordinated efforts extended by National Tourist Organisation and or tourist enterprises at international, national and local levels to optimise the satisfaction of tourist groups and individuals in view of sustained tourist growth”.

Tourism offer is the sum of all charges which a tourism service provide offers to its various users in terms of products and price. There are various types of users of tourism services and tourism offers are different for different users. Types of users of Tourism services

I. Non-users are those persons who are not interested in using the services The reasons may include lack willingness and pursuit of leisure.

2 Potential users are the prospective users. They have willingness to avail tourism services. They are influenced through marketing strategies.

3. Persons who are already using the services of tourism are known as actual users.

4. Persons who occasionally travel is known as occasional users of tourism services.

5. Habitual users are in the habit of availing tourism services regularly.

Marketing of Tourism Services

The designing of the marketing mix variables in case of tourism is significant as it helps the marketer in conceiving the right ideas, particularly to raise the acceptability of the tourist product by stimulating and penetrating the demand. Framing of a proper marketing mix is significant because it helps the tourist organization in accomplishing the objective and projecting a fair image.

Product Mix: Tourism is a composite product with components like attraction facilities and transportation. Attraction deserves an intensive care. It includes natural site, places of historic interest, events and cultural attraction. The facilities compliment attraction. The facilities include accommodation, food, transportation and recreational facilities. The transportation component includes the vehicles and infrastructure. Innovation in the tourism product helps raising the sensitivity. The users of the service are looking forward to better and improved product. The provider of the tourist is a travel agent or the package tour. A well-conceived and designed package tour, covering a wide range of tourist attraction at an economic price, helps in attracting the potential tourist. The travel agent performs numerous activities such as hotel arrangement and accommodation, site seeing arrangement, domestic transport arrangement, air travel arrangement etc. In a true sense the tour agents and the travel agents are the vehicles who can give a fillip to the tourism industry, provided they are well trained.

Pricing: Pricing of the tourist product is complex. Geographical location of the destination, seasonality and varying demand affects the pricing decision. In India the pricing strategies become important for promoting or contracting the tourism industry, since more than 40% of the total population are below the poverty line. In order to develop the tourism industry more and more potential users are to be transformed into actual users.  When a tourist proposes to visit a particular place, the total cost of his traveling also include the expenses incurred on transportation, accommodation and communication. Liberal pricing strategy is found to be a productive pricing decision, particularly in case of tourism industry. The pricing strategy which includes low income group people, student and retired persons can be more effective. This is possible if the government concessional and subsidized infrastructural facilities to the potential tourist below the average income. The different pricing methods generally used are cost based pricing, demand based pricing and competition based pricing. 

Promotions: The promotion mix includes advertising, publicity, sales support and public relations.  The purpose of promotion is to make available the information to the user. Advertising the sales promotion can be effective when supplemented by publicity and personal selling. Radio, TV, newspapers, cinema and printings are some of the important vehicles for traveling of messages. Effective slogans raise the effectiveness of advertisement.  Another important component of the promotion mix is public relation. It helps in projecting the image of an organization. Public relation and publicity include regular articles and photographs of tour attraction, use of TV and travel journalists to promote editorial comment. Public relation officer plays an important role. He should be efficient, active, impressive, intelligent and well-behaved.  Good image projection can be made if the PRO manages the affair like a professional. It is said that word of mouth is the best form of publicity. The word of mouth promotion is an important tool in tourism marketing.

Place: The tourist centers should be located at suitable points if the tourist’s spots are natural there is no question of selection. In a vast country like India with a divergent socioeconomic and cultural patterns, the promotion of domestic tourism encourages unity in diversity.  Infrastructural facilities, transport and communication are important for development of tourist centres. The site selected should have natural surroundings, increased accessibility and improved amenities. At the same time, it is also important that the ecological balance is not disturbed. Since growing ecological imbalances leads to pollution, some important steps like promoting afforestation, promotion and beautification may be undertaken in countering the side effects of atmospheric pollution and maintaining ecological balance.


(b) Explain the marketing practices of hospitality services in India.           12

Ans: Marketing of Hotel or Hospitality services

Hotels are a vital and essential part of the tourism industry. A hotel is an establishment that provides paid lodging and fooding facilities on a short-term basis.

Types of hotels

1. One star hotels: These hotels belong to the no-frills variety that offers basic bedding and bathroom facilities. The furniture, décor, etc. may not be of high quality, but is mostly comfortable. Arrangements for meals may or may not be included.

2. Two star hotels: The extra star here is for a proper reception desk and some amount of staff presence. Two star hotels are suitable for people with limited budgets but who are travelling with their families and need a reasonably safe place to stay.

3. Three star hotels: Three star hotels are mostly good for business travellers who are travelling for a short period on business. They are also a good option for female travellers who are travelling alone and don’t want the tension of staying at a place where their security could be at risk or their belongings unsafe. Three-star hotels are generally part of a larger chain and have footprints in more than one location.

4. Four star hotels: The premium variety of hotels starts from here. There will be larger rooms, better décor, more amenities, and better services like availability of porters, 24-hour room service, laundry, and multi-cuisine restaurants. Four star hotels are mostly used by corporate travellers where the company pays for the stay.

5. Five star hotels: Five star hotels are top level hotels. Breakfast served in bed, shoes polished, clothes washed and facilities for getting almost. Other facilities include huge lobbies, round-the-clock room service, swimming pools, gyms, sauna, spas, badminton/tennis courts, beauty salons – etc. The staff in these hotels mostly comprises hotel management graduates from the best schools, well-trained in customer service, crisis management, etc. The clientele that five star hotels cater to include big names from fields of entertainment, business, and sports.

6. Five star deluxe hotels: This type of hotels caters to the movers and shakers of the world. A private balcony, fully stocked mini-bar, personal masseur, king-sized beds – these are just some of the rare luxuries you can treat yourself to at a five-star deluxe hotel. The most well-known brands belonging to this category include the Taj, Hilton, Leela Palace, Grand Hyatt.

Hotel Pricing and Distribution

Pricing: It is difficult for a hotel to exercise differential pricing except for certain specific purpose. These may typically be differentials in tariffs and prices during the peak and lean seasons; group rates; contract rates for airline crew; special conference rates or special concessions to attract customers etc. However, by and large, hotel pricing tends to follow or conform to pricing standards applicable to the particular city area or resort, to competitive hotels, to the amount of traffic being generated in the hotel location, tourist location, international or national conference venue, and so on. Nevertheless, hotel pricing also suffers from a degree of lack of flexibility, although to a lesser extent than that of the hotel product.

The depreciated valuation of the hotel property, its financial management efficiencies, credit policies and other factors, specially cost of empty room-nights, fixed overheads, also have a bearing on tariffs and menu prices.

Distribution: Hotel distribution relies on interdependence with other industries serving travelers and tourists such as the transportation industry (airlines, railways, roadways, shipping lines), travel agents and tour operators, national and state tourism organisations, shopping and entertainment providers. In sum, those services which provide certain other facilities to the travellers or the tourist which are bought when accommodation and food are assured.

Communications: This element of the hotel marketing mix is the most important one as it is directly responsible for bringing customers to the hotel. Hotel marketing communications are either direct or indirect. The direct communications are through personal selling, advertising, sales promotion and direct mail. Appropriate messages are conveyed to those who are potential buyers of the hotel product and those who directly influence decisions to buy the hotel product. Personal selling of the hotel product is effective when long-term relationship between the hotel and the customer is sought. It is also required where the level of business per customer is likely to be significant. Indirect marketing communications for hotels include public relations and publicity, both of which may and may not form a part of the hotel’s marketing communication programme but may function independently. The major elements of the hotel communication mix thus are – mass media advertising, direct mail, sales promotion, public relations, and publicity.

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