7 Real Reasons Startups Fail

Designing and Managing Services

Designing and Managing Services

A service is any act or performance one party can offer to another that is essentially intangible and does not result in the ownership of anything. Its production may or may not be tied to a physical product. Service industries are everywhere
Categories of Service Mix

The service component can be a major or minor part of the total offering. Five categories of offerings are:

1. Pure tangible good - a tangible good such as toothpaste, with no accompanying services.
2. Tangible good with accompanying services - a tangible good, like a cell phone, accompanied by one or more services.
3. Hybrid - an offering, like a restaurant meal, of equal parts goods and services.
4. Major service with accompanying minor goods and services - a major service, like air travel with additional services or supporting goods such as drinks.
5. Pure service - primarily an intangible service, such as babysitting or psychotherapy.

Distinctive Characteristics of Services

Four distinctive service characteristics greatly affect the design of marketing programs:
Intangibility - Unlike physical products, services cannot be seen, tasted, felt, heard, or smelled before they are bought.

Inseparability - Services are typically produced and consumed simultaneously.
Variability - Services are highly variable because the quality depends on who provides them, when and where, and to whom.

Perishability - Services cannot be stored, so their perishability can be a problem when demand fluctuates.
The New Services Realities
A Shifting Customer Relationships

Savvy services marketers must recognize three new services realities: the newly empowered customer, customer coproduction, and the need to engage employees as well as customers.

Customer Empowerment - customers are more sophisticated about buying support services and are pressing for "unbundled services" so they can select the elements they want.

Customer Coproduction - the reality is that customers do not merely purchase and use a service: they play an active role in its delivery. Their words and actions affect the quality of their service experiences and those of others, and the productivity of frontline employees.

Satisfying Employees as Well as Customers - Excellent service companies know that positive employee attitudes will promote stronger customer loyalty. Employees thrive in customer-contact positions when they have an internal drive to (1) pamper customers, (2) accurately read customer needs, (3) develop a personal relationship with customers, and (4) deliver quality service to solve customers' problems.

What does Marketing Orientation really mean?

Business orientations are classified into the following groups: Production Orientation, Product Orientation, Sales Orientation, and Market Orientation.

Production Orientation Dominated the business landscapes of the industrial revolution and mid 1900’s; this is where a company is heavily focused on streamlining production processes and concentrating on improvement efficiencies with little focus on anything else. Scenario: We can build a car for you, but it comes in black only.

Product Orientation – An approach to business that centres its activities on continually improving and refining its products. All efforts are put into making the product better.  Scenario: We can offer you non-chip paint on your car.

Sales Orientation – Some businesses see their main problem as not selling enough of the product or services which they already have available, hence predominantly focusing on sales and selling techniques. As a result these organisations operate as Sales Oriented companies.

A sales orientated business pays little attention to customer needs and wants and is more concerned about selling. Scenario: If you sign up for the car now we’ll throw in a sunroof.

When a business bases its ability to make profits on using powerful selling techniques to persuade people to buy its products, rather than on customer needs.

Market Orientation – This is a culture rather than an individual process. It’s the norms, mindsets, values and behaviours of employers; alongside the structure, systems and control of the organisation. Marketing oriented businesses define their activities as service activities carried out towards the satisfaction of their customers.

In other words they define their operation as a service business with customer service being the most important activity. They are driven by customer needs which are identified in their objectives. Scenario: We’ll make your car in whatever colour you choose.

A marketing orientated approach means a business reacts to what customers want. The decisions taken are based around information about customers’ needs and wants, rather than what the business thinks is right for the customer. Most successful businesses take a market-orientated approach.

Most markets are moving towards a more market-orientated approach because customers have become more knowledgeable and require more variety and better quality. To compete, businesses need to be more sensitive to their customers’ needs; otherwise they will lose sales to competitors.

Take the current global car markets; the idea that car manufacturers can create a product and sell its features to the eagerly waiting buying public is no longer an option. With an increasingly global economy and more and more choices for consumers, companies must be willing to adapt their market orientation to stay competitive.

When to use it?
Use market orientations when you want to understand, anticipate and satisfy your customer needs. You may already be operating somewhere in-between orientations. Companies can be anywhere on the spectrum as well as having different products at different orientations.

What does it achieve?

• A sense of what customers want
• Links customers needs to company capabilities
• Builds relationships
• Creates vision
• Greater internal marketing and communications
• Tracking and information systems for further research and evaluation

Key steps:

• Audit and analyse current orientation
• Decide on strategy
• Implement full marketing mix
• Evaluate and control

Top Tips: Being marketing orientated is more than just being customer-led. It requires the full support of the organisation in order to be fully implemented in the long term, and may need a complete change in a company’s culture.

Market Segmentation is all about when it comes to innovation and growth.. Segmentation is a way to discover segments of opportunity; segments of customers that have different unmet needs and potentially require different solutions. The discovery of these segments drives product strategy as companies may choose to target the most underserved segment or the most overserved segments..