Service Marketing Solved Paper May 2018, Dibrugarh University B.Com 6th Sem CBCS Pattern

 Service Marketing Solved Question Paper May 2018
2018 (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) Intangibility and perishability are the unique characteristics of service.

Ans: True

b) Goods-services continuum explains the difference between goods and services on the basis of dominance of tangibility/intangibility element.

Ans: True

c) Pre-purchase stage is the last step of consumer purchase decision process.

Ans: False, First step

d) Psychographic segmentation refers to the consumer groups in terms of demographic similarities.

Ans: False, Geographic and Demographic

e) The service marketing mix comprises of 4 P’s.

Ans: False, 7 P’s

f) Total quality management helps in energizing the innovation process.

Ans: True

g) Domestic tourism involves residents travelling in another country.

Ans: False, Same country

h) Financial services do not include financial intermediaries.

Ans: False

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

a) Service marketing triangle.

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) Goods vs. services.

Ans: Difference between Goods and Services: Generally, it is regarded that a good is a thing and a service is an act. In other words, goods represent the object, or material whereas services are deed or a performance. Both services and goods are interlinked. For example, the airline passenger while availing the services of airport enjoy consumption of food, etc., So, it is comparatively difficult to conceive a pure service or pure good. A pure good gives benefits containing no element of service. Likewise, a pure service would contain no element of goods. Goods can be physically touched and verified. they can also be carried home and can be stored at a place. But services like banking, insurance, personal care, baby-sitting, transportation etc., Cannot be stored at a place. The effects of services include, pleasure, entertainment, relieve from ailment etc. The differences between goods and services may be studies under the following heads:





Services are intangible in nature. They cannot be touched or hold.

Goods are tangible in nature. They can be touched and hold.


Services are inseparable in nature. Production, distribution, and consumption of service take place simultaneously.

Function of distribution and consumption of goods can be separated from the function of production.


Services cannot be owned. They can be hired for a specific time period.

Goods can be owned.


Services get perished after a specific time period. It cannot be stored for future use.

Goods can be stored for future use.


Services are more heterogeneous. It is very difficult to make each service identical.

Goods are less heterogeneous. It is possible to make each goods identical.

c) Psychographic segmentation.

Ans: Psychographic Segmentation: This approach is more focused than geographic and demographic approaches. Under this approach, consumers are divided into groups based on lifestyle, personality and values. Many a time, the consumer belonging to the same geographic and demographic group may exhibit different psychographic profiles. People belonging to the same demographic group may vary in their activities, opinions, value perceptions and interests. To use this basis of segmentation, service providers have to develop a sound database on the psychographics of the market in order to make the service offer more focused.

d) Market positioning.

Ans: Once that target segment or market is clear, the service marketer has to position himself appropriately for that segment. Positioning, as is now well understood in marketing, is an integral part of strategy for a new service provider. Even in the case of a mature business, a service marketer needs to reaffirm its positioning in the minds of target customers. At times, a subtle shift in positioning may also be necessary to keep up with the changing consumer preferences or to cope with the challenges from competitors.

Briefly, the positioning is a mental image or picture that a service provider would like to have about it in the consumer’s mind. It is a deliberate attempt at building an identity of a certain kind for the service. The act of creating an image about a product or service in the consumer’s mind is known as positioning.

In the words of Kotler, “Positioning is the act of designing the company’s offer and image so that it occupies a distinct and valued place in the target consumers’ minds.” In short, the process of creating an image for a product in the minds of targeted customers is known as product positioning. Close-up tooth paste is looked upon by the consumers more as a mouth wash than a teeth cleaner, while ‘pepsodent’ has created an impression of germ killer in the consumers’ minds.

e) Service quality dimensions.

Ans: 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.

f) Banking financial service.

Ans: Financial services are the economic services provided by the finance industry, which encompasses a broad range of organizations that manage money, including credit, unions, banks, credit card companies, insurance companies, accounting companies, consumer finance companies, stock brokers, investment funds and some government sponsored enterprises. Following is the list of some typical financial products available in the market.

a)       Savings and Recurring Account

b)      Current Account

c)       Fixed Deposits

d)      Retail Loan Products

e)      Commercial Loans

f)        Leasing and Hire Purchase

g)       Credit Cards

h)      Insurance

i)        Mutual Funds

Beside these, banks and finance companies provide a number of fee-based Services such as merchant banking, issue management for raising equity from the market, foreign exchange advisory services etc.

Branding is a major input in the marketing strategy of commercial products, can be successfully used in the marketing of financial services too. Brand is a broad term that includes practically all means of identifying a product e.g., the LIC logo, Citibank’s “City” – schemes, Canara Bank’s “Can”-etc. The concept of branding of financial products offers several advantages. Brands command customer loyalty for the product. Each brand has a consumer franchise which can be used to its advantage. Financial products aim to attract the investors to bring his savings into the market. This is quite a delicate task because the investor’s money is involved. Most of the financial instruments are very similar. This is where the advantages of branding can be exploited. Branding can help in creating differentiation between the various financial products or public issues. Branding can also help to create some insulation from the competitor’s promotional strategy. A successful brand will be demanded by a consumer even if the price is slightly higher. Trust is the key element if people are expected to part with their money. A good name evokes that trust and gives the investors’ confidence that their money will be safe. Branding, especially umbrella branding, helps the consumers to decide whether to buy a product when the new product quality cannot be determined prior to purchase. Another strong advantage of branding is that good brands help to build the company’s corporate image. In umbrella branding, the advertising and promotion costs of subsequent products can be reduced considerably. This is because the brand-name recognition and preference is already there.

g) Higher education scenario in Assam.

3. (a) Discuss in detail the reasons for growth of service sector in India. Also mention the service sector and its contribution to Indian economy. 7+7=14

Ans: 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.

Role of Service Sector in Indian Economy

Services lie at the very hub of economic activity in any society. Our welfare and the welfare of our economy are now based on services. Almost all countries of globe look interested in utilising this sector of the economy. For the developing countries like India, the need of the hour is to assign due weightage to the development of service sector. The service sector is assuming increasing importance in the Indian economy.

In the recent past, we have seen the transition from agrarian nature of economy to agro-based industry to industrial growth, now we tend to think in terms of developing the service sector. Probably it is because this sector can create more jobs at a low cost. Service sector has significant contribution for income generation and employment creations. In India, service sector is one of the fastest growing sectors today. It provides more than 55 per cent of the jobs and about 40 per cent export is from service sector. The service sector dominates the Indian economy today, contributing more than half of our national income. According to National Accounts Statistics and RBI in 1999-2000 the share of Agriculture, industry and services in GDP are 25.5, 22.1 and 52.4 per cent respectively. Below Table shows the distribution of GDP in primary, secondary and tertiary i.e., service sector over the years.

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It is evident from the above Table that service sector which is constituted by trade, transport, storage, communication, banking, insurance, real estate, community and personal services, etc. has gradually increased from 28.5 per cent in 1950-51 to 31.8 per cent in 1970-71 and 46.2 per cent in 1998-99.

An India Today-ORG-MARG poll showed that a majority of middle class families want their children to work in the service sector. With best jobs, best incomes and best talents, the service sector is now the show case of the Indian Economy.

No wonder the service sector will be the biggest driver of new economic growth and profit earning in the new millennium for the world in general as well as for India in particular. As a result, the service organisations, if they have to be successful, have to have a more

professional approach to manage their business. Perhaps, it is in this context the role of marketing is gaining importance in the service organisations.


(b) What do you mean by ‘service environment’? Explain the broad classification of services.                     2+12=14

Ans: The service market environment is a marketing term and refers to all of the forces outside of marketing that affect marketing management’s ability to build and maintain successful relationship with target customers. The market environment consists of the Micro environment, Macro environment and the internal environment.

A. THE INTERNAL ENVIRONMENT: All factors that are internal to the organization are known as the ‘internal environment’. This includes all departments, such as management, finance, research and development, purchasing, operations and accounting. Each of these departments has an impact on marketing decisions. They are generally audited by applying the ‘Five Ms’ which are men, money, Machinery, Materials and Markets. The internal environment is as important for managing change as the external.

B. 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.

Classification of services

Services are classified into two groups, i.e. services in consumer markets and services in industrial market.

1. Services in consumer markets: The following services come under this category

A). Food services: Food services are offered by hotels, restaurants and catering services. Food is supplied in restaurants as well as delivered to customers’ residence. Catering agents supply food for occasions like wedding, engagements, birthday, conference etc.

b). Boarding and lodging services: These services are provided by hotels and lodges to the people who travel to distant places. Growing tourism has contributed to remarkable growth in boarding and lodging services.

c). Personal care services: These are the services provided to meet the personal care needs of customers like health, appearance, physical fitness etc. personal care service include service offered by beauty parlors, barbershops, gymnasiums, dry cleaners hospitals etc.

d). Entertainment service: These services include cinema, drama, dance, music, amusement park, cable, TV etc. There is an increasing tendency among the people to send more money on entertainment services.

e). Transport services: These include the services provided by railways, road transporting facilities, air transport such as flights and helicopters and water transporting services such as ships and boats.

f). Automobile services: These are services provided to the owners of automobile vehicles for their repair and maintenance. They are provided by units called service stations.

g). Communication services: These are services provided to help people to exchange4 information. These services include telephone, telegraph, e-mail, telex, fax etc. mobile phone and internet has revolutionaries the field of information communication.

h). Education service: Education service provides coaching to students in various disciplines and to prepare them for various examinations. These services are provided by schools, colleges and universities.

i). Insurance service: Insurance services are provided to protect people against the risk of loss of life and properties. Insurance companies sell various insurance policies in the field of life insurance and general insurance. They provide a sense of security to the policy holders.

j). Financial services: These are the services provided to the people to meet their varied financial needs. They are performed by various financial institutions like banks, NBFCs, Chitty companies, stock brokers, mutual fund companies etc. Their services include keeping of deposits, providing various types of loans, discounting bills, hire purchase financing stock broking etc.

2. Services in industrial market: The following services come under this category.

a). Financial services: Finance is essential for carrying out business operations. Companies require both short term and long term finance. This finance is provided by commercial banks, merchant banks and other financial institutions. Investment companies guide firms in investing in share and bonds.

b) Insurance service: All business units are exposed to variety of risks. Insurance companies provide necessary protection against risk such as fire, marine losses, theft, accidents etc.

c). Transport services: Business units require transport services for moving men and materials to the factory and men finished goods from factory. These services are provided by various transport companies by means of trains, trucks, buses ship aero planes etc.

d). ware housing service: Warehousing services are required for keeping materials and finished goods until they are needed for use. Warehoused in public sector and private sector offer these services to the business units.

e). Advertising services: Advertising is the most commonly and widely used mode of promotion. Advertising agencies help the businessmen to plan and implement advertising campaigns. They also help to study the effectiveness of advertising.

f). Consultancy services: Consultancy services refer to advice given to management on various matters such as production, marketing, finance etc. Most of the business units especially small and medium sized depends on management consultancy firms to solve their problems.

g). Office services: Several types of services are required for the efficient functioning of business offices. These include Xeroxing, scanning, cleaning etc.

h). Engineering services: Engineering services include assistances given to business units in planning new projects, designing plants, construction of buildings, erection plant and machinery etc. these services are provided by sepecialised engineers.

i).HR services: HR services considered as the most important asset of a business concern. Proper selection and training of man power is essential for organizational development. Selection and training is often entrusted to specialized recruitment agencies.

4. (a) Define the concept of consumer behaviour in services. Explain in detail the consumer purchase decision process. 2+12=14

Ans: Consumer Behavior in service

All of us buy different services for various reasons. One person may prefer to go to a restaurant for good food while the other may opt for an exclusive restaurant, for status. One person may prefer to read ‘The Times of India’ early in the morning, while the other may prefer to read the same newspaper after coming back from the office. There are women who don’t go to beauty parlors at all, whereas there are others who go regularly. Similarly, there are many such examples telling us that people show different behavior in buying and using different products and services.

Consumer purchase decision process for services

When customers decide to buy a service to meet an unfilled need, they go through what is often a complex purchase process. This process has three separate stages-the pre-purchase stage, the service encounter stage, and post-purchase stage.

1. Pre-purchase stage: The decision to buy and use a service is made in the pre-purchase stage. Individual needs and expectations are very important here because they influence what alternatives customers will consider. If the purchase is routine and relatively low risk, customers may move quickly to selecting and using a specific service provider. But when more is at stake or a service is about to be used for the first time, they may conduct an intensive information search. The next step is to identify potential suppliers and then weigh the benefits and risks of each option before making a final decision.

2. Service encounter stage: After deciding to purchase a specific service, customers experience one or more contacts with their chosen service provider. Contacts may take the form of personal exchanges between customers and service employees or impersonal interactions with machines or computers. In high-contact services, such as restaurants, health care, hotels, and public transportation, customers may experience a variety of elements during service delivery, each of which has the potential to provide clues to service quality.

Service environments include all of the tangible characteristics to which customers are exposed. The appearance of building exteriors and interiors; the nature of furnishings and equipment; the presence or absence of dirt, odor, or noise; and the appearance and behaviour of other customers can all serve to shape expectations and perceptions of service quality.

3. Post-purchase stage: During the post-purchase stage, customers continue a process they began in the service encounter stage- evaluating service quality and their satisfaction or dissatisfaction with the service experience. The outcome of this process will affect their future intentions, such as whether to remain loyal to the provider that delivered service and whether to pass on positive or negative recommendations to family members and other associates.

Customers evaluate service quality by comparing what they expected with what they perceive they received. If their expectations are met or exceeded, they believe they have received high-quality service. If the price-quality relationship is acceptable and other situational and personal factors are positive, then these customers are likely to be satisfied. As a result, they are more likely to make repeat purchases and become loyal customers. However, if the service experience does not meet customers’ expectations, they may complain about poor service quality, suffer in silence, or switch providers in the future.


(b) Discuss in detail the common bases for segmenting the consumer market. Give your reasoning favouring service market segmentation in India.   10+4=14

Ans: Bases of segmentation (Factors of service market segmentation)

Service Market segmentation dividing the Hetrogenous market into homogenous sub-units. Heterogeneous means mass marketing, which refers people as a people. Homogeneous means dividing the market into different sub units according to the tastes and preferences of consumers. The following are the popularly used bases for segmenting service markets.

a) Geographic Segmentation It is the simplest way of segmenting the market. Under this approach, the market will be divided into various geographical units. Companies generally use the marked divisions such as nations, states, regions, cities and towns to get the benefits of already existing database resources at a very low price. Geographic segmentation reflects in the identification of cultural groups, climatic differences, resource combinations, demand supply gaps, religion and race. It provides opportunity to the service stalls to explore distinctive opportunities for product development as well as product differentiation.

b) Demographic Segmentation Demography is the study of population. Under this approach, the market will be divided into segments based on various demographic variables such as age, family size, gender, family life cycle, income, occupation, education, religion, race, nationality and social class. The differences in consumer responses based on the demographic variables are studied and accordingly segmentation plan is worked out. The demographic variables are the most popular basis for differentiating customer groups. Wants, preferences, user status and usage rates are mostly associated with demographic variables. In addition, demographic variables are easier to measure.

c) Psychographic Segmentation This approach is more focused than geographic and demographic approaches. Under this approach, consumers are divided into groups based on lifestyle, personality and values. Many a time, the consumer belonging to the same geographic and demographic group may exhibit different psychographic profiles. People belonging to the same demographic group may vary in their activities, opinions, value perceptions and interests. To use this basis of segmentation, service providers have to develop a sound database on the psychographics of the market in order to make the service offer more focused.

d) Behavioural Segmentation for this approach, consumers are divided into groups based on their knowledge, attitudes and use or response to a service. The variables used under this segmentation are occasions, benefits, user status, usage rate, loyalty status, buyer readiness stage and attitude towards the service.

e) Techno graphic Segmentation The market for technology related services has been on a tremendous rise during the last one-and-a-half decade. Marketers are trying to identify the customer groups that have the willingness as well as the ability to use the latest technology. Forester Research Incorporation has developed a ten-category segmentation scheme, which is also called 'technogrality'. Identification of segments was based on the interaction of three variables. These are attitude towards technology, application of technology and the financial position of the consumers.

Best Marketing Segmentation

Since services are intangible in nature and also perishable, techno graphic segmentation is considered to be best bases for market segmentation. Due to emergence of technical environment, this base is growing importance day by day. The market for technology related services has been on a tremendous rise during the last one-and-a-half decade. Marketers are trying to identify the customer groups that have the willingness as well as the ability to use the latest technology. Forester Research Incorporation has developed a ten-category segmentation scheme, which is also called 'technogrality'. Identification of segments was based on the interaction of three variables. These are attitude towards technology, application of technology and the financial position of the consumers. 

5. (a) Define ‘service marketing mix’. Also discuss the ‘new service development process’. 4+10=14

Ans: Service Marketing Mix: 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.

The New Service Development Process

It is a systematic, staged process, which organizations should adopt to screen new service ideas and maximize their chances of success in the market. There are a variety of frameworks proposed to guide new service development. An appropriate framework (process) comprises the following stages:

1.       Generation of ideas.

2.       Screening.

3.       Testing the concept.

4.       Business analysis/evaluation.

5.       Development.

6.       Market testing.

7.       Product launch.

1.       Idea of Generation: Ideas can be generated from within an organization and also from outside, either formally or informally in other words it can come from both internal and external sources. The internal sources could be from sales staff, front line personnel, the suggestion box, new developments arising from existing services, and external sources could be from customers, experts in the field, market demand analysis and gap analysis.

2.       Screening: A number of ideas generated in the first stage must be screened to ensure.

·         Their consistency with the organization’s existing strategy.

·         The extent to which they fit the image of the organization and its capability, their appeal to particular segment and

·         Their cost and profitability implications.

Screening requires thorough evaluation, the application of weights to the different criteria and the development of ranking for the various ideas in terms of the suitability.

3.       Testing the Concept: The ideas which constitute the new product or service must be translated into a specific feature and attributes which the product or service will display. Concept testing is usually done through marketing research. It involves presenting the idea or concept, to the target market and studying their reactions to make necessary modifications to the product before it is launched. The extensive test marketing should be carried out to set the benefits, not only in terms of feedback but also in terms of developing an appropriate marketing/campaign to find the product launch.

4.       Business Analysis: At this stage, ideas which have been selected to be developed further require in depth exploration and evaluation. The important task is to produce a formal analysis of market potential of the ideas in terms of forecasting all aspects of developing and launching the service. The idea is now translated into a business proposal. The business analysis focuses on defining the market, market size and structure, consumer trends in the market, levels of demand, current and future, external environment factors likely to affect performance, competition, market share forecasts, financial forecasts, costing, breakeven analysis, etc.

5.       Practical Development: At this stage preparation are made for developing and launching the service. The service providers undertake the work of designing and supply of literature and supporting materials. A detail marketing programme is developed to cover all aspects of marketing mix. They are Advertising and Promotional Campaigns, channel selection, packaging the new service offering, pricing policy and staff training.

6.       Market Testing: Marketing research is carried to test the concept; it is necessary to test the market to reduce the risk. This may be done artificially by using panels of consumers who will use the product or service at their residence or testing in the actual market but in a small area may do it. The test marketing can help organizations to blend the elements of marketing mix to optimize the chances of success, and also be a strong indication of likely performance in the wider market.

7.       Launch: The product launch is the final stage and the organization now can make decisions on when to introduce the new service, where, to whom and how to introduce the new service. It is at this stage that the life cycle is said to commence and the new service moves from being purely cost, to bringing in revenue. At this stage major decisions are taken regarding the timings of the launch, the geographical location of the launch and the specific marketing tactics to be used in support of that launch. There are different ways in which the success of new product and service can be measured. The evaluation of a new launch can vary according to which measure of success is used.


(b) Discuss the role of advertising in service marketing.                 14

Ans: Advertising for services

Advertising is the impersonal communication used by service firms. Advertising in service marketing adds to the customer's knowledge of the service, persuades the customer to buy and differentiates the service from other service offerings. Persistent advertising is, therefore, a must for the success of the marketing of the service. Since the core product is intangible, service marketers find promotional aspects difficult. They choose the tangible elements that come along the product for promotion. Airlines, for example, promote their service by advertising about the quality of cuisine, the width and pitch of seats and the quality of their in-flight service. Nowadays, advertising is extensively undertaken for financial services, telecommunication, retailing, etc. Service firms spend a considerable Sum on advertising. Objectives of advertising have been identified as:

a)       creating an understanding of the company in the customers' minds by describing the company's services, activities and its areas of expertise

b)      creating a positive image for the company

c)       building a strong sense of identification with the customer by turning his needs, values and attitudes

d)      creating a positive background for the sales people to sell the services by providing all relevant information about the company.

Significances of Advertising: Advertising is the most commonly used tool of promotion. It is an impersonal form of communication, which is paid by the marketers (sponsors) to promote goods or services. Common mediums are newspaper, magazine, television & radio. Advertisements play a very important role in offering innumerable benefits to the manufacturers, customers and to the society in general. Following are the benefits of Advertisements:

1.       Advertisements attracts new buyers and maintains existing customers and to the society in general.

2.       Advertisements inform the consumers about the quality and uses of the product.

3.       Advertising also acts as an information service and educates the con­sumer. It enables him to know exactly what he wants and where to get it. 

4.       Advertising stimulates production and reduces the cost per unit. This reduction in the cost is generally passed on to the consumer.

5.       Advertising also makes it possible to sell direct to the consumer by Mail Order Business. 

6.       Advertising helps in creating goodwill, brand image and brand loyalty.

7.       Advertisements help the retailers in selling the advertised products.

8.       It is also helpful in getting better employees and executives.

6. (a) Elaborate the ‘health care service industry’. Also discuss the factors responsible for the growth of health care services in India. 4+10=14


Ans: Health care is one of our basic needs. Hospitals play an important role in giving health care facility to customers. The type of health services available in India can be broadly categorized into two:

a) Government owned

b) Privately owned / commercial

The Government has a network of institutions at primary, secondary, and tertiary levels. These include sub-centers, primary health centers, community health centers, rural hospitals and dispensaries in rural areas, sub-divisional and divisional hospitals, medical college hospitals and specialized hospitals. One important government health care scheme is the Employee State Insurance scheme designed for industrial workers. The scheme is mainly financed by contributions from employers and employees in the implemented areas. The scheme provides both medical benefits as well as cash benefit like sickness benefits, disablement benefit, maternity benefits etc. Health care needs in India has been categorised into three main categories in the customer’s point of view.

1) Emergency Care: As the name suggests, this is required in situations of dire necessity like accidents, fire, stroke etc. These are the situations when the survival of the patient is in question.

2) Routine Care: This refers to periodic patient visits to the medial professional involving checkups and for ailments where meeting a doctor is essential but an immediate meeting is not critical.

3) Elective Treatment: This is a medical procedure that a patient chooses to undertake on his or her own initiative. These include ‘Life Stage Treatments’ (associated with events which people typically plan for at some stage in their life like permanent birth control procedures, teeth removal in old age etc.) and ‘Life Style Treatments’ (associated with activities that people undertake to improve their ‘Self’, boost their image e.g. cosmetic surgeries, weight reducing treatments, hair implantation etc.). Life Style Treatment segment is likely to grow in India at a fast rate.

Factors leading to the growth of Health care in India

The following are the key indicators, which drive the industry towards high growth:

1. The Government of India is giving high priority to this sector by an increased budgetary outlay. It has considerably reduced custom duties on medical equipment imports. It has allowed higher depreciation rates on equipment to fiscal incentives for new hospitals.

2. Supreme court's ruling makes it mandatory for all the hospitals to establish advanced infrastructure for emergency medical devices. Moreover, there should be an effective clinical waste management system.

3. Government has proposals to upgrade most of the sub health centers with better infrastructure.

4. Huge investments are being made both by private and government healthcare players on world-class equipment and devices.

5. Growing number of doctors annually lead to increased demand for medical equipment.

6. Cut in custom duties will invite multinationals to invest in manufacturing medical equipment in India.

7. With the privatization of insurance sector, more and more Indians are being covered under medical insurance. This naturally requires proper and quality health care infrastructure. (Source: Economic times)

In the detachment phase, the patient is discharged from the hospital on the advice of the consultant after settling the account. Finally, feedback is obtained from the patients. The patient evaluates the worthiness of the service rendered to him. Patient's suggestions are considered important for the further improvement of the services.


(b) Define ‘tourism marketing’. Discuss the various types of tourism segmentation in India. 2+12=14

Ans: Tourism Marketing: 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".

From the above, the following points can be understood:

(i) Tourism marketing is a process of creating a product or service.

(ii) It comprises fact finding and marketing research.

(iii) Tourism marketing aims at transforming potential tourists into the actual tourists.

(iv) It is confined to generating demand and increase of market share.

(v) Tourism marketing is a managerial process involving a sequence of activities aiming at customer satisfaction.

Segmentation in the Tourism market

The tourism market can be segmented by using variables like: (a) age groups; (b) number of trips taken per annum/season; (c) income and education; (d) purpose of the trip. In contrast to the first three the last variable i.e. purpose of the trip has been fairly extensively used by the major players in the tourism industry – hotels, tour operators and travel agents and airlines Using this criterion segments have been identified as travel for business, vacation, convention, personal emergencies, visits to relatives and other types.

Most popular categories of tourism

The Tourism industry has developed through the years and presently is one of the most diversified, customized and specialized industries. Let us have a brief description of some of the most popular types of tourism worldwide where tourists are categorized by the purpose of their visit.

a. Leisure Tourism: Leisure time can be defined as “free time”, not doing any work. It is that time to do things that you normally have no time for in your daily life. Leisure tourism includes a holiday with the following:

- Leisure activities

- Relaxation: Sleep, relax, reading, walk on the beach, taking a scenic drive

- Sport activities: hiking, swimming, surfing, running

- Visit places of interest and local attractions

- Visiting friends and relatives

- Shopping for goods that will be used by the tourist.

b. Business Tourism: Business tourism can be defined as “travel for the purpose of business”. Business Tourism can be divided into three sections:

- Trading for goods to be resold on a wholesale basis

- Conduct business transactions e.g. visiting a client, contract negotiations.

- Attending a conference, exhibition or event associated with their business.

c. Medical Tourism: Medical Tourism involves people who travel to a different place to receive treatment for a disease, health condition, or a surgical procedure, and who are seeking lower cost of healthcare and higher quality of care. Favorite procedures in medical tourism include Cardiology, Cardiothoracic, Cosmetic Surgery, Plastic and Reconstructive Surgery, Weight Loss, Neuron, Eye, Orthopedic Surgery, as well as Organ Transplants (kidney). Medical Tourism services include medical facilitation, travel arrangements, accommodation, transportation and tour packages.

d. Cultural Tourism: Cultural tourism or sometimes referred to as heritage tourism is the division of tourism concerned with the region’s culture, specifically the lifestyle and history of the people, their art, architecture, religion and other elements. Cultural tourism includes cultural facilities such as museums, theatres and festivals. This is one of the most popular types of tourism and attracts tourists from different parts of the world.

e. Adventure Tourism: Adventure tourism is an outdoor activity that generally takes place in an unusual, remote or a wilderness area. This adventurous activity can take place in the sea, in rivers, in the air, in mountains and is associated with low or high levels of physical activity. There are many types of products and services that fall within the Adventure Tourism category such as: bungee jumping, mountaineering expeditions, rafting, rock climbing, diving, wind surfing, paragliding and many more.

f. Wellness Tourism: Wellness tourism is one of the fastest growing forms of international and domestic tourism. This form of tourism involves people who travel to a different place to pursue activities that maintain or enhance their personal health and wellness, and who are seeking unique, authentic or location-based experiences. Wellness tourism include massages, body treatments, facial treatments, exercise facilities & programs, weight loss programs, nutrition programs, pre- and post-operative Spa treatments and mind/body programs.

g. Eco Tourism: Ecotourism is “Responsible travel to natural areas that conserves the environment and improves the well-being of local people.” The purpose of ecotourism is to educate the traveler about natural destinations, to provide ecological conservation and awareness, to benefit economic development, the political empowerment of local communities and respect for the local culture. Here the traveler can experience the natural way of life surrounded by natural circumstances.

h. Sports Tourism: Sports tourism refers to international travel either for viewing or participating in a sporting event. Examples include international sporting events such as the Olympics, world cup (soccer, rugby, and cricket), tennis, golf and Formula 1 Grand Prix.

i. Religious Tourism: Religious Tourism or faith tourism are people of faith who travel on their own or in groups to holy cities or holy sites for pilgrimages, crusades, conventions, retreats, religious tourist attractions or missionary work.

j. Wildlife Tourism: Wildlife tourism is the observation of wild (non-domestic) animals in their natural environment or in captivity. It includes activities such as photography, viewing and feeding of animals. This form of tourism offers tourists customized tour packages and safaris and is closely associated with eco-tourism and sustainable tourism. Other minor forms of tourism include Slum tourism, Luxury tourism, Agritourism, Geo-tourism, culinary tourism and many more. Tourism is also a profitable industry for the following sectors: accommodation venues, tour guides, recreation, attractions, events and conferences, food and beverage, transportation and the travel trade.

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