The Product In Service Marketing Mix

The Product In Service Marketing Mix The service marketing mix is also known as an extended marketing mix and is an integral part of a service . The service marketing mix consists of 7 Ps as compared to the 4 Ps of a product marketing mix. Simply said, the service marketing mix assumes the service as a product itself. However it adds 3 more Ps which are required for optimum service delivery. servicemarketingmix Service Marketing Mix The product marketing mix consists of the 4 Ps which are Product, Pricing, Promotions and Placement. These are discussed in my article on product marketing mix the 4 Ps. Product The product in service marketing mix is intangible in nature. The product element of the marketing mix includes the tangible good and all of the services that accompany that good to produce the final product. A product is a package, or bundle, of goods and services that comprise the total offering. For example, the purchase of a hotel room includes the guest room, fitness center, pool, restaurants, valet service, concierge, housekeeping service, etc. A restaurant meal consists of the actual food, host/hostess, and waiters, etc. Finally, a travel experience consists of a chain of products and services starting atthe time of purchase and ending upon returning from the trip. Everything in between, such as hotel service, restaurants, and transportation (including taxis and buses), affect the overall experience. Some of the variables that are part of the product decision include variety, quality, design, features/amenities, brand name, packaging, supporting services, and warranties. As stated earlier, the decision regarding the proper mix of goods and services is based on the wants and needs of consumers (the concept of marketing. Place The place element of the marketing mix includes the distribution and logistics of producing a product or service and making it available to the final consumer. The location of a manufacturing or wholesaling facility is determined by considering the costs of resources such as labor, raw materials, and real estate. In addition, it is necessary to have access to the preferred mode(s) of transportation for delivering the products to wholesalers and retailers. The location of a retail establishment is based mainly on accessibility to the final consumers. Services have relatively short channels of distribution and focus most of their efforts on finding retail locations that are convenient for consumers. For example, restaurants tend to choose high traffic areas close to shopping and other attractions. Similarly, hotels locate their facilities in areas such as airports, urban centers, industrial centers, and tourist attractions that are accessible to their respective target markets. Some of the variables that are part of the place decision include the type of channel, location, assortments, coverage area, inventory, and transportation. Many service providers overlook the importance of this variable in the strategic planning process. The channel of distribution tends to be shorter for the marketing of services than that for goods, and most service providers act as manufacturer and retailer. Many managers in service firms assume that once the initial location is determined this variable diminishes in importance. However, hotels and restaurants do switch their operations to a more favorable location on occasion. This is a major decision involving company time and resources, but it can result in long-term growth and increased profit if handled properly. Another good example of a place decision for a hotel is the Harborside Hyatt in Boston, Massachusetts.. Promotion The promotion element of the marketing mix includes all of the communications associated with marketing a product or service. The promotion mix consists of four elements: advertising, personal selling, publicity, and sales promotion. Advertising and publicity are forms of mass communication using a variety of mediums such as television, radio, newspaper, magazines, direct mail, and the Internet. Advertising is a paid form of mass communication with an identified sponsor, while publicity is a non-paid form of mass communication without a sponsor (i.e., it is free and objective). Personal selling is a form of interpersonal communication sponsored by the firm. Sales promotion is a short-term inducement to purchase a product or service. Some examples of sales promotions are contests, sweepstakes, premiums, and product bundles. Pricing Pricing in case of services is rather more difficult than in case of products. Price. Price is the value placed on a product or service. Other terms that can be used to refer to the price component of the marketing mix are: fee, rate, tuition, premium, and toll. There are non-monetary elements to price as well as the more obvious monetary elements. Some examples of non-monetary price are the time it takes to search and evaluate alternative products or services and the convenience of location. If a consumer drives to several locations to shop for a product or service, then there are costs associated with time, gas, and depreciation on the car. Also, there could be tolls for highways, bridges, or subways. In the end, it is the perceived price or the perceived value the consumer associates with a product or service that influences the purchase and the level of customers satisfaction. Value is the trade off between price and quality the benefits the consumer receives for the pr ice paid. Here on we start towards the extended service marketing mix. People : The role of the service employee becomes much more critical since to a very real extent the employee is the service, given the absence of any tangible artifact. They carry the responsibility of projecting the image of the service firm. Because of the inseparability of production and consumption of services, service delivery is characterized by interactions between customers and service employees. Service employees who experience positive human resource practices can devote their energies and resources to effectively serving their customers. The service firms human resource management practices can create an environment that elicit more positive, courteous and helpful behavior from the employees toward customers. In turn, the behavior that employees display will positively impact on service quality. Physical Evidence : Physical evidence of service includes all the tangible representations of service such as clear signage, good ventilation, adequate space, internet presence, equipment and facility. As services are intangible, customers are searching for any tangible cues to help them understand the nature of the service experience. For example, in the hotel industry, the design, furnishing, lighting, layout and decoration of the hotel as well as the appearance of its employees will influence customer perceptions of the service quality and experiences. For theme parks, restaurants, health clubs, hospitals or schools, the physical facility is critical in communicating the service and making the entire customer experience positive. Ambient conditions include background characteristics of the environment such as temperature, air quality, lighting, noise, music, and scent affect the five senses. Spatial layout of the equipment, and furnishings arranged, the size and shape of these items, and the spatial relationships among them are also crucial to influence customers perception. Process : Process is referred to as the procedures, mechanisms and flow of activities by which the service is delivered i.e. the service delivery and operating systems. Delivering customer expectations depends on how well various steps function together. Highly bureaucratized services frequently follow complicated and extensive series of actions, and the logic of the steps involved often confuse the customer. Customers may complain that service firms are slow in response and bureaucratic with the many steps involved. They want easy access to the service process, and they want things to be handled quickly, preferably by the first service employee. Customers describe frustrating experiences when they have to run from pillar to post to complete a simple transaction, experience long waiting time, rules and regulations, and personnel who decline to serve them with the excuse Im not allowed to do this or this is against our policy. Service LIC An Ordinance was issued on 19th January, 1956 nationalizing the Life Insurance sector and Life Insurance Corporation came into existence in the same year. The LIC absorbed 154 Indian, 16 non-Indian insurers as also 75 provident societies-245 Indian and foreign insurers in all. The LIC had monopoly till the late 90s when the Insurance sector was reopened to the private sector. History Life Insurance Corporation of India (LIC) was formed in Sep 1956 after the Parliament of India passed the Life Insurance Corporation Act in Jun 1956. The company was created with the objective of spreading life insurance more widely, especially to reach all the insurable people in the rural areas and provide them with adequate financial cover at a reasonable cost. Apart from its corporate office, LIC had five zonal offices, 33 divisional offices and 212 branch offices in 1956. The nature of life insurance contracts being long-term coupled with the need to provide a variety of services during the term of the policy, LIC re-organised itself by opening a number of new branch offices. After its re-organisation, servicing functions were transferred to branches which were converted to accounting units. Operations As on Mar 2008, LIC had 2,048 fully computerised branch offices, 109 divisional offices, eight zonal offices apart from its corporate office. LICs network connects all the branches through wide area network. The company also has tie-ups with certain banks and service providers to offer on-line premium collection facility in select cities. Besides, ECS and ATM premium payment facility to its customers, the company has also commissioned IVRS and information centres at Mumbai, Ahmedabad, Bangalore, Chennai, Hyderabad, Kolkata, New Delhi, Pune, amongst other cities. LIC has also launched Satellite Sampark offices in order to provide easy access to its policy holders. The company had 340 such offices as on Mar 2008. LIC also provides housing finance through LICHFL. It has also formed an asset management company known as LICMF AMC. The corporation has also extended its operations to the international arena; through various JVs and subsidiaries it operates in as many as nine countries. Products Services LIC offers a wide array of insurance products to its customers such as insurance plans, pension plans, unit-linked plans, special plans and group scheme. During FY08, the company introduced certain new products such as Profit Plus, Fortune Plus, Jeevan Akshay, Jeevan Amrit Amulya Jeevan. As of Mar 2007, total number of agents of the company stood at 1.1 mn while the total number of policies issued was 38.2 mn. The premium earned by the company reported a growth of 41% in FY07 when compared to the previous year. During the year, the company insured 34.28 mn individuals for the first time 7 P`s of Services Marketing in LIC The marketing mix is the combination of marketing activities that an organization engages in so as to best meet the needs of its targeted market. The Insurance business deals in selling services and therefore due weight-age in the formation of marketing mix for the Insurance business is needed. The marketing mix includes sub-mixes of the 7 Ps of marketing i.e. the product, its price, place, promotion, people, process physical attraction. The above mentioned 7 Ps can be used for marketing of Insurance products, in the following manner: PRODUCT: A product means what we produce. If we produce goods, it means tangible product and when we produce or generate services, it means intangible service product. A product is both what a seller has to sell and a buyer has to buy. Thus, an Insurance company sells services and therefore services are their product. In India, the Life Insurance Corporation of India (LIC) is the leading companies offering insurance services to the users. Apart from offering life insurance policies, they also offer underwriting and consulting services. When a person or an organization buys an Insurance policy from the insurance company, he not only buys a policy, but along with it the assistance and advice of the agent, the prestige of the insurance company and the facilities of claims and compensation. . In short, the formulation of product-mix should be in the face of innovative product strategy. While initiating the innovative process it is necessary to take into consideration the strategies adopted by private and foreign insurance companies through various plans like Endowment plan, pension plan, ULIP. PRICING: In the insurance business the pricing decisions are concerned with: i) The premium charged against the policies, ii) Interest charged for defaulting the payment of premium and credit facility, and iii) Commission charged for underwriting and consultancy activities. . The pricing in insurance is in the form of premium rates. The premium rates are revised if there are any significant changes in any of the below factors. a) Mortality b) Expenses c) Interest PLACE: This component of the marketing mix is related to two important facets i) Managing the insurance personnel, and ii) Locating a branch. . While locating branches, the branch manager needs to consider a number of factors, such as smooth accessibility, availability of infrastructural facilities and the management of branch offices and premises. In addition it is also significant to provide safety measures and also factors like office furnishing, civic amenities and facilities, parking facilities and interior office decoration should be given proper attention. Thus the place management of insurance branch offices needs a new vision, distinct approach and an innovative style. This is essential to make the work place conducive, attractive and proactive for the generation of efficiency among employees. The branch managers need professional excellence to make place decisions productive. PROMOTION: Advertising and Publicity, organization of conferences and seminars, incentive to policyholders are impersonal communication. Arranging exhibitions, participation in fairs and festivals, rural wall paintings and publicity drive through the mobile publicity van units would be effective in creating the impulse buying and the rural prospects would be easily transformed into actual policyholders. PEOPLE: Understanding the customer better allows designing appropriate products. Being a service industry which involves a high level of people interaction, it is very important to use this resource efficiently in order to satisfy customers. Training, development and strong relationships with intermediaries are the key areas to be kept under consideration. Training the employees, use of IT for efficiency, both at the staff and agent level, is one of the important areas to look into. PROCESS: The process should be customer friendly in insurance industry. The speed and accuracy of payment is of great importance. IT Data Warehousing will smoothen the process flow. IT will help in servicing large no. of customers efficiently and bring down overheads. Technology can either complement or supplement the channels of distribution cost effectively. It can also help to improve customer service levels. The use of data warehousing management and mining will help to find out the profitability and potential of various customers product segments. PHYSICAL EVIDENCE: The physical evidence are includes such as policy document, statements, intimation letter, uniforms of personnel, vending machine of LIC enquiry option , LIC logo and their awards. AXIS BANK Axis Bank Limited was the first of the new private banks to have begun operations in 1994, after the Government of India allowed new private banks to be established. The Bank was promoted jointly by the Administrator of the specified undertaking of the Unit Trust of India (UTI I), Life Insurance Corporation of India (LIC) and General Insurance Corporation of India (GIC) and other four PSU insurance companies, i.e. National Insurance Company Ltd., The New India Assurance Company Ltd., The Oriental Insurance Company Ltd. and United India Insurance Company Ltd. The Bank today is capitalized to the extent of Rs. 358.56 crores with the public holding (other than promoters) at 57.60%. The Banks Registered Office is at Ahmedabad and its Central Office is located at Mumbai. Presently, the Bank has a very wide network of more than 701 Branch offices and Extension Counters. The Bank has a network of over 2854 ATMs providing 24 hrs a day banking convenience to its customers. This is one of the largest ATM networks in the country. The Bank has strengths in both retail and corporate banking and is committed to adopting the best industry practices internationally in order to achieve excellence. Axis Bank Limited has been promoted by the largest and the best Financial Institution of the country, UTI. The Bank was set up with a capital of Rs. 115 crore, with UTI contributing Rs. 100 crore, LIC Rs. 7.5 crore and GIC and its four subsidiaries contributing Rs. 1.5 crore each. THE SERVICE MARKETING MIX OF AXIS BANK PRODUCT The main products of AXIS Bank are Saving Account, Current Account and Demat Account. The other products are Home loan, personal loan, Insurance, Credit cards, etc. For better marketing of products, the products are categorized under Axis Bank and Axis Sales. Products under Axis Bank are Saving Account Current Account Forex Department Salary Accounts Products under Axis Sales are Home loan Personal loan, Demat Account PRICE The price of the product depends upon the services provided by the Bank on the respective product to the customers. Detailed pricing changes from time to time and the same can be found on the website of Axis bank. PLACE Place plays an important role in tangibilizing service offerings. Quality of service is perceived by many customers in the form of place of delivery- locational appeal, interiors, ambience, etc. If a bank is located in a crowded market the place or location will be a negative tangibilizes. Providing excellent tangibles in the form of place or location and interiors is particularly important for appealing to the customers segment. More recently, some of the private banks in India like AXIS Bank are providing very attractive tangibles in the form of their locations, exteriors and interiors. PROMOTION Promotion can tangibilize services in different forms: Visualization Association Physical representation Documentation. Visualization tangibilizes services through hoardings, TV and print campaigns or advertisements. Physical representation in services has a good promotional appeal to customers like use of colors to symbolize wealth and status. Service providers use documentation in their promotions in support of their claims for dependability, popularity and responsiveness PEOPLE People are a common factor in every service. And people tangibilize services. Good people (means good performance) make good or successful services. Bad performers deliver bad services. PROCESS Customer defined business process- Process innovations and continuous improve- ment through people involvement. Result oriented approach- Each process has been designed by first planning the desired results. Axis Bank is constantly taking initiatives to offer the best in class service that seek to enhance customer experience. PHYSICAL EVIDENCE Reduce paper usage- Due to technological innovations such as use of Finacle software for core banking solutions. It has positioned it self as a bank which gives higher standard of services through product innovation. Satisfies the diverse need of individual and corporate clients. It is customer centric, and service oriented . Now we will compare the strategies of both axis bank and adlabs, LIC provides life insurance policy, like Endowment plan, pension plan, ULIP. Axis bank also offers variety of products like Saving Account, Current Account and Demat Account. The other products are Home loan, personal loan, Insurance, Credit cards In LIC the pricing decisions are concerned with :i) The premium charged against the policies, ii) Interest charged for defaulting the payment of premium and credit facility, and iii) Commission charged for underwriting and consultancy activities. . The pricing in insurance is in the form of premium rates. The price of the product depends upon the services provided by the Bank on the respective product to the customers. LIC consider a number of factors, such as smooth accessibility, availability of infrastructural facilities and the management of branch offices and premises Quality of service is perceived by many customers in the form of place of delivery- locational appeal, interiors, ambience, etc. If a bank is located in a crowded market the place or location will be a negative tangibilizes. AXIS Bank are providing very attractive tangibles in the form of their locations, exteriors and interiors. Advertising and Publicity, organization of conferences and seminars, incentive to policyholders are impersonal communication. Arranging exhibitions, participation in fairs and festivals, rural wall paintings and publicity drive through the mobile publicity van. Visualization tangibilizes services through hoardings, TV and print campaigns or advertisements. Physical representation in services has a good promotional appeal to customers like use of colors to symbolize wealth and status. Service providers use documentation in their promotions in support of their claims for dependability, popularity and responsiveness .LIC being a service industry which involves a high level of people interaction, it is very important to use this resource efficiently in order to satisfy customers. Training, development and strong relationships with intermediaries are the key areas to be kept under consideration. In axis bank Good people (means good performance) make good or successful services. Bad performers deliver bad services. The process should be customer friendly in insurance industry. The speed and accuracy of payment is of great importance. IT Data Warehousing will smoothen the processflow. IT will help in servicing large no. of customers efficiently and bring down overheads Customer defined business process- Process innovations and continuous improve-ment through people involvement.Result oriented approach- Each process has been designed by first planning the desired results.Axis Bank is constantly taking initiatives to offer the best in class service that seek to enhance customer experienc The physical evidence are includes such as policy document, statements, intimation letter, uniforms of personnel, vending machine of LIC enquiry option , LIC logo and their awards In Axis bank physical evidenceReduce paper usage- Due to technological innovations such as use of Finacle software for core banking solutions.It has positioned it self as a bank which gives higher standard of services through product innovation. CONCLUSION There is littile bit similarity in the service marketing mix of LIC and axis bank but there is difference in the marketing strategy of the both companies