Page 169 - DMGT510_SERVICES_MARKETING

Services Marketing

Notes 9.2.1 Marketing Responses to PLC

The primary use of life cycle theories is to predict the strategic marketing mix required at each
of its stages.

Introduction

The marketer can make use of market penetration strategies by investing in promotions or
making widespread entrée through low price, and skimming strategies where short-term gain
is the objective with high entrée price. For services, the marketer is more capable of moving in
at high speed than the goods marketer, as he does not have to grapple with such problems of
production, inventory, storage and logistics.
The service marketer can choose from any of the given four market entry alternatives (Figure 9.3):
Figure 9.3: Market Entry Strategies for New Offers

Rapid Skimming: It is an expensive initiative combining high price and high promotion, directed
at a low aware, low willingness-to-buy market. This strategy is very useful if the market size
and potential is very high and the likelihood of the competition to quickly adopt and adapt to
the offer is also very high. When a service firm has a short-term goal of profit maximization and
increase in the sales volume, it can resort to this strategy. The target markets are the Early
Adopters and Innovators who do not mind paying the high price for the privilege of being the
early users.

Example: The early entrants in the cell phone service operations like BPL Mobile, Max
Touch/Orange/Hutch, RPG Cellular, etc., followed this strategy.
Slow Skimming: This strategy is used when the service firm is confident that it can recoup its
investments in sufficient time. This could be due to lack of competition (public sector
undertakings, infrastructure services like airlines, telecommunication, etc., are some examples),
requirement of heavy investments in technology and systems to compete, etc. The target market,
mostly business and industrial users pays for the high price as the product is exclusive and vital
for their competitiveness. Five star hotels and Enterprise Resource Planning (ERP) and Supply
Chain Management (SCM) System providers like SAP, BaAN, i2, Mindtree Consulting, etc., used
this strategy.
Rapid Penetration Strategy: If the service firm has a long-term objective of being a market
leader, market share and profit maximization, and if there exist entry barriers like intensive
competition, then this strategy is useful.

Did u know? ICICI Bank as also Korean firms like Samsung and LG entered India
with their dreaded retailing, using rapid penetration strategy.

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