Page 38 - DMGT510_SERVICES_MARKETING
P. 38
Unit 2: Service Marketing Environment
Relative Power of Suppliers Notes
Suppliers begin to pose a threat when they start raising their prices. The increased cost of goods
for a retailer will tell on his profitability if the retailer is not able to recover his price. Service
firms should look for alternatives and substitutes.
Threat of New Entrants
New entrants will increase supply, diluting the exclusivity of the service and sending premium
prices into a downward spiral. Also, the new entrants will seek to increase market share. This
will see a further lowering of prices, affecting profitability of all competitors across the board.
Threat of Substitutes
Service firms compete with each other (direct) but also with substitute goods and services.
Example: SBI will not only compete with other retail banks but with LIC, Birla SunLife,
etc., for insurance, with Post Offices for savings and with the IPOs of companies for its mutual
funds.
The service marketer should constantly look out for this threat - as it is the most invisible
competition of all.
Self Assessment
Fill in the blanks:
6. Channel partners are
customers of an organisation.
7. Distributors and suppliers are part of a firms
environment.
8. Indian Speed Post is facing threats by increased no. of courier services that serve as
competitors.
9. Spice Jet Airlines is a
competitor for Indigo Airlines.
10. The intensity of rivalry depends on the
and the differentiation between
rivals.
2.3 Environmental Scanning: Scenario Building Approach
This process is futuristic, and the decision-maker has to analyze his decisions in relation to his
future. The following steps are involved in this technique:
Stage 1: Analysis of the Decision(s)
The decision-maker makes a detailed analysis of all the resources that he might require to
implement his decisions.
Example: Thus, if a financial institution like ICICI decides to go into retail banking, then
it has to take into account the human and material resources that would be required.
It could include among others an analysis of the estimated distribution networks, technology
and technology support.
LOVELY PROFESSIONAL UNIVERSITY 33
