Sample Answer

2. Marketing in Service Industry
In most of the developed countries over the world service industries have outgrown the production industry in terms of their contributions to national income. The reasons can be varied related to the growth of service sector; our study is in the marketing context. Service industry is important and worthwhile to pay attention on because of the special issues in their marketing (Kotler and Armstrong, 2012, p.259).

“A service is an intangible product involving a deed, a performance, or an effort that cannot be physically possessed”. (Shostock, 1977, p.177).As expressed in these definition service products has different characteristics from industrial products. They are intangible and cannot be owned physically.

The university marketing is the person, institution and social desire and development, pricing, distribution and promotion of services for needs. (Yamamato, 1997, p.13).

“For the businesses in the service industry following four service characteristics should be when they designed a marketing program”.

— Service intangibility “means that services cannot be seen, tasted, felt, heard, or smelled before they are bought. To reduce uncertainty, buyers look for signals of service quality. They draw conclusions about quality from the place, people, price, equipment and communications they can see”. (Kotler and Armstrong, 2014, p.261)

— Service inseparability “means that services cannot be separated from their providers, whether the providers are people or machines. If a service employee provides the service, then the employee becomes a part of the service. And customers don’t just buy and use a service; they play an active role in its delivery. Customer coproduction makes provider-customer interaction a special feature of service marketing. Both the provider and the customer affect the service outcome”. (Kotler and Armstrong, 2014, p.261)

— Service variability “means that the quality of services depends on who provides them as well as when, where, and how they are provided”. (Kotler and Armstrong, 2014, p.261)

— Service perishability “means that services cannot be stored for later sale or use”. (Kotler and Armstrong, 2014, p.261)

“Although services are “products” in a general sense, they have special characteristics and marketing needs. The biggest differences come from fact that services are essential intangible and they are created through direct interactions with customers”. (Kotler and Armstrong, 2014, p.261)

There are some major effects or issues, requiring different marketing implications, in consequence different characteristics of marketing sector. Because of the intangibility of service it will be difficult to evaluate service propositions for customers, also positioning is difficult before experienced it for example, as a high quality or low quality. Inseparability characteristics of service cause customers’ direct contact with provider. Relationship between provider and client affects quality. Variability means in all the times may not be ensured same quality service, customers may not be satisfied because human is an important element of provision of services. To eliminate perishability factor matching supply and demand is important in services sector because of the service products cannot be stored. Some periods there can be excess of supply or demand. (Lancaster and others, 2002, p.216-219)

Marketing in service sector required different marketing strategies. In the service sector there is an interaction between customers and front-line employees to ensure this service. So, to be successful in service sector both employee and customers should be focused on. In the marketing of a service 4Ps (price, place, product, promotion) of traditional external marketing is used, but they are not enough for a good marketing mix in service sector. It requires external and interactive marketing activities which we can classify them additional 3P’s (people, physical evidence, process). (Lancaster and others, 2002, p.219-220)

2.1. Product in Service Sector

Service is an intangible product. A service product is a cluster of service characteristics and customer advantages. According to Lynnshostack following four risks make to describe service word complex. (Rao, 2007, p.122-123)

⁻ Over simplification; generally service customers do not tell their experiences in detail

⁻ Incompleteness; it is not easy to express service experiences verbally.

⁻ Subjectivity and biased interpretation; people can have different preferences and perception about a service also service quality may change time to time and its effect exposure of customer so expression of experiences would be subjective and biased

To produce a high quality service it important to be well understood service product by customer as well as provider (employees in direct interaction).To design a new service product these four risks should take into account. . (Rao, 2007, p.122-123)

Basic Service Package; “Because of the service product is intangible; it creates some issues for provider. To eliminate these issues and meet customer expectations, needs and wants ideally provider should create a system that fully integrates the intangibles the tangible components of the service. Basic service package helps to understand service products. We can simply express this package with three components”;

⁻ Core service; “reason being in the market”. For example, a university is in sector for education service.

⁻ Facilitating services and (goods); “these services or goods allow using core service for customer. Facilitating services do not facilitate consumption or use of core service, but increase the value of service offering”. For instance, a university required academic staff, equipment, materials to serve education.

⁻ Supporting services; “to have a competitive edge supporting service is important. Supporting services are necessary administration of a system. Innovation, speed, boldness and flexibility examples of supporting services” (Shanker, 2008, p.56-60).

“Management of service firms must select appropriate strategies regarding”

• “What services will be offered”

• “What will be the length and breadth of the service mix offered and”,

• “What, if anything, needs to be done in the way of service attributes such as branding or providing guarantees?” (Stanton,1984,p.501)

New service development is as important for service companies as it is important to develop new products for companies that are selling products. Also, development of existing services and removing the nonadvantageous services is important. To be successful in service sector it is important for the businesses product life cycle and to pursue new market trends. In service marketing to develop a new product depend on the awareness of customers ‘variable needs and necessities (Stanton, 1984, p.501).

2. 2.Price in Service Sector

“Price is what consumers willing to pay for services. How much a costumer has to pay depend on the value he perceives in the service offer. The payment can be any forms-money, barter or return services.”(Monroe, 1990, p.5)

Price formation is an important factor to differ successful and unsuccessful businesses. For the probability of a firm to determine proper price is a critical factor. In price
formation process both acceptability of price by consumers and profit should be considered (Petrovic, 2009, p.76-80).

Despite, many methods using in price formation of products, can be used for the services because of the different characteristics of service there may be some differences in price formation.

“Price formation is a process depends on expenses, competition, demand, state regulative” (Petrovic, 2009, p.77). These different characteristics may affect price formation process differently depending on market situation or the type of service. For example, the price of a certain service is audited by governmental agencies or local public institutions. For the service marketing price formation is important because purchase of a service generally depend on desires. A buyer can easily delay the purchasing decision. Besides, a low demand elasticity service price may be determined as high, but when elasticity of demand increased, price cannot be reduced easily. A service that needs huge investments is generally executed in monopolistic markets; they are independent in price formation (Petrovic, 2009, p.329-343).

Price factor can be used to create an image for a product and having a comparative advantage. Price generally can be influenced by the demand and rival firms that are sharing same market (Brenan and others.2007, p.331, Avlonitis and Indounas, 2005, p.48).

2.3. Promotion in Service Sector

“The word ‘promotion ‘is derived from the Latin word ‘promovere’, ‘meaning an attempt to shift the attention of people from one end of spectrum (disinterest) to the other (interest)’” (Bhattacharjee, 2006, p.345).Promotion is an important tool in service marketing, It is important for the service marketers to have a advantage in service positioning at the same time to overcome issues that emerge because of the intangible characteristic of a service. It helps to add concrete and value to what is offered. “Promotion is consisting of the following major areas of marketing”.