Page 270 - DMGT510_SERVICES_MARKETING

Unit 14: Service Strategies

Notes
Example: A cell phone operator will try to segment its market by usage - heavy users,
moderate users and light users of its cell phone service. It will then try to convince all of them,
especially the medium and light users to talk more and use other services like SMS, games,
downloading of ring tones and more.
Similarly, when ICICI Bank mines the data base of its Infrastructure ‘Safety’ Bonds customers
and asks its marketing personnel to convince them to use its credit cards, if they haven’t done so
yet, or any other products like home and personal loans, then it becomes a classic case of market
penetration strategy. If the universal bank devises some promotion schemes which would
increase the customer’s loyalty by buying maximum offers (like general insurance, bonds,
credit cards, retail bank services, e-services, personal and home loans, etc.) from it, like a one-
stop shop, then it is pursuing market penetration strategy to grow. It is targeting its present
customers with its full bouquet of offers, including new offers.
Market Development Strategy: This strategy is adopted by a service firm when it perceives that
its old market is drying up, that its old customers are having a change in their preferences. The
service firm, being convinced that the offers have potential, and then continues to offer its old
bouquet of service products but now to an entirely new set of customers. Service product
repositioning will also come under this marketing strategy. The newly targeted customers will
perceive these offers to be new (which is actually the correct definition for new products) and
therefore the marketing promotions and communication will consist of components of
persuasion, education and awareness.

Example: Holiday destination managers like Goa beach tourism marketers and
Maharashtra Tourism Development Corporation looked at the Indian domestic tourist market
for its 32 beach resorts after the inflow of foreign tourists slowed down to a trickle after 9/11.

What happens if the service marketer finds its present market stagnating (not growing) and
therefore looks to newer markets, alongside its old ones? This is called a market development
strategy. SBI began introducing special service branches for its high net worth customers in
addition to servicing its old customers. Construction and housing major Hiranadanis of Mumbai
have got into retailing (Haiko, The Loft), game parks (‘Hakone’), and education (ICSE schools)
and are offering these services to customers of its homes. Business schools trying to attract
industries for executive development programmes (Executive MBA) is another example of market
development strategy.
Product Development Strategy: The service firm develops new offers/products for its
old/present customers. Having successfully created customers (an expensive proposition), come
to know them and their preferences well and garnered their trust; the company then tries to
satisfy their additional needs for services by offering it themselves. From the customer’s
perspective, the trust and familiarity is already made, quality of the service transaction for the
previous service has already been experienced and the encounter has been positively judged
(most important for services, due to the inherent intangibility of the service offer). The loyalty
of the old customers makes them try out their new service offers while for the service marketer;
it is a good growth option at lower costs.

Example: SBI gets into life insurance and bancassurance, credit cards, home and personal
loans, etc., targeted to the old customers. A pharmaceutical company like Wockhardt might
offer medicines for cardiac and kidney cases and now it has opened a heart hospital in Mulund,
Mumbai and Bangalore, a kidney hospital in Kolkata, etc. Kotak Mahindra, the non-banking
finance group has stepped into insurance (OM Kotak) and retail bank, to offer new services for
its old clients.

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