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Unit 3: The Service Marketing Mix and Purchase Process
customer while the tangible level manages the appearance of the product. The augmented Notes
level involves the addition of supplementary services to the basic offering.
These three levels can be condensed into two, the core level that caters to the basic benefits and
a secondary level which includes the tangible as well as the augmented service levels. The core
level basically deals with the service offering while the secondary service level deals mostly
with the delivery of service.
Example: The core service of a restaurant is to serve good food to the customers while
the secondary service includes providing them with a good ambience.
It is easy to differentiate products from one another when compared to services.
Example: How can a customer differentiate between the services of two banks which
offer similar schemes and interest rates?
The new product development for services, therefore, involves offering innovative services and
adding new secondary services at regular intervals. This helps marketers attract and retain
customers in a competitive market.
Pricing
The pricing of services is very different from the pricing of goods for various reasons. Services,
for example, can be differentiated based on their price, as a higher price is generally associated
with better quality. Another differentiating factor between services and goods as far as pricing
is concerned, is the cost component involved. The fixed cost is high and the variable costs are
low for a service, when compared to a product.
Example: The marginal cost involved in serving a customer in restaurants is negligible
while the fixed cost of establishing and maintaining the restaurant is high.
Therefore, a major part of the price paid by the customers is directed towards covering the fixed
costs of the service provider. In case of a product, a major part of the price paid by the customer
goes towards the variable cost of producing that unit of the product.
Another important aspect of pricing of services is that the price of the same service can be
changed depending on the demand for the service. Though this happens with some of the
products which are seasonal, it is basically dependent on demand as far as services are concerned.
Example: The owner of a discotheque can increase or decrease the price of entry
depending on the demand. Similarly, banquet owners raise the tariff during the peak season and
lower it during the lean season.
Promotion
Service consumers experience a high level of perceived risk when compared to consumers of
products because of the intangible nature of services. Service providers should aim to promote
their services in order to eliminate the elements of this perceived risk. This can be best achieved
by encouraging and promoting positive word-of-mouth publicity, developing strong brands,
offering a trial use of service for the customers and finally, by managing advertising and public
relations effectively to clearly communicate the message to the customers. Promotion of service
offers cannot be carried out in isolation without promoting the service provider, as consumers
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