Marketing of Services/Financial Markets and Institutions

 

Ans 1 Waiting Line (Queue) Management

The waiting line or queue management is a critical part of service industry. It deals with issue of treatment of customers in sense reduce wait time and improvement of service. Queue management deals with cases where the customer arrival is random; therefore, service rendered to them is also random.

A service organization can reduce cost and thus improve profitability by efficient queue management. A cost is associated with customer waiting in line and there is cost associated with adding new counters to reduce service time. Queue management looks to address this trade off and offer solutions to management.

Waiting Line Problems

Waiting in line is common phenomena in daily life, for example, banks have customers in line to get service of teller, cars queue up for re-filling, and workers line up to access machine to complete their job. Therefore, management needs to work on formulae, which will reduce wait time and create delighted customers without incurring an additional cost. Generally, queue management problems are trade off’s situation between cost of time spent in waiting v/s cost of additional capacity or machinery.

Finite and Infinite Population

In a waiting line scenario, there are cases of finite population of customers and infinite population of customers.

A finite population scenario considers a fixed or limited size of customers visiting the service counter. It also assumes that customer once served will leave the line thus reducing overall population of customers.

However finite population model also considers a scenario where the customer after getting served will re-visit the service counter for re-service, leading to increase in finite population.

An infinite population theory looks at a scenario where subtractions and addition of customer do not impact overall workability of the model.

Queuing System

To solve problems related to queue management it is important to understand characteristics of the queue. Some common queue situations are waiting in line for service in super-market or banks, waiting for results from computer and waiting in line for bus or commuter rail.

General premise of queue theory is that there are limited resources for a given population of customers and addition of a new service line will increase the cost aspect to the business. A typical queue system has the following:

Arrival Process: As the name suggests an arrival process look at different components of customer arrival. Customer arrival could in single, batch or bulk, arrival as distribution of time, arrival in finite population or infinite population.

Service Mechanism: this looks at available resources for customer service, queue structure to avail the service and preemption of service. Underlining assumption here is that service time of customers is independent of arrival to the queue.

Queue Characteristics: this looks at selection of customers from the queue for service. Generally, customer selection is through first come first served method, random or last in first out. As a result, customers leave if the queue is long, customer leave if they have waited too long or switch to faster serving queue

 

Ans 6 Pricing Strategies for Service Businesses

There are many different pricing strategies to choose from. Here are 11:

1. Market penetration strategy: Set prices low to grow market share. Then increase your rates over time as your customer base grows. Admittedly, this isn’t a common pricing strategy for service businesses, but it can help you grow your customer base quickly. The big problem with this approach is that some customers may associate the lower price with an inferior level of service. You will also have to work a lot harder to cover your costs.

2. Price skimming: The opposite of a market penetration strategy. Here you set a high price and lower it over time. Again, this isn’t your typical pricing strategy for a service business. But it may work if you have something special to offer. The pros are that you’ll maximize your profits upfront and grow a more sustainable business. The big drawback, however, is that if you can’t justify the price, you’ll struggle to get your business off the ground.

3. Premium pricing: Charge higher prices because you have something that makes you unique. For example, do you offer a warranty or service guarantee that your competitors do not? Do you use exclusive tools or technology that make your business easier to work with and deliver results that stand out?

READ MORE: What to do when customers say your price is too high

4. Economy pricing: Set low prices because overheads are low. Your costs may be low for several reasons. Perhaps you use software to organize and manage your business instead of hiring an assistant. Or maybe you have a special arrangement with one of your suppliers which allows you to get inexpensive supplies.

5. Cost-plus pricing: Calculate the cost to deliver your services and add a margin for a profit. For example, if you know your time and materials cost $200, and you want to make a 20% profit margin, simply charge $240. This is a straightforward pricing strategy, but it can cost you money because you may end up setting a lower price than what customers are actually willing to pay.

6. Psychological pricing: Prices based on the psychological impact they have. For example, it’s believed that odd prices like $19.97 are more attractive than round numbers like $20.00.

7. Competitive pricing: Charge according to what the competition charges. While competitors can give you a good idea of where to start, remember that your business is unique. Just because someone is charging a specific price doesn’t mean you should match or undercut them.

8. Bundled pricing: Also known as packaged pricing, this strategy involves bundling various services together and charging one price. Bundled services are usually cheaper than if customers were to purchase each service individually. If done correctly, this technique is a great way to upsell more services and boost your profits—as Dave Moerman of Revive Washing notes:

“Our house washing package is our most requested and most profitable service. This is a full soft wash of siding, windows, and gutters). Homeowners like this package because it takes care of all services with one detailed visit…For our crew to be profitable, we have to do a certain amount of revenue per day. Small jobs are okay to slot in, but we like to have a good-size house wash for each crew for each day. From a profitability perspective, it’s much better.”

9. Good, better, best pricing: Also known as tiered pricing or price bracketing. Offer clients the option of choosing between different levels of service or packages. In window cleaning, for example, you can offer a basic package for $99 (outside cleaning only), a standard package for $149 (inside and outside), or a deluxe package for $199 (inside, outside, tracks and sills). Each package offers incrementally more value, and the difference in price gives the consumer a chance to consider what they are willing to spend.

Ans 8 Difference between Goods and Services

 

Basis	Goods	Services
Meaning	Goods are tangible items that can be felt, touched or seen.	Services are intangible that cannot be seen, felt, touched or seen; but are experienced by the consumer.
Nature	Goods are tangible in nature.	Services are intangible in nature.
Type	Goods are homogeneous and can be produced exactly the same.	Services are heterogeneous and depend upon the person providing the service and the customer’s preferences.
Transfer of Ownership	The ownership of goods can be transferred from one person (seller) to another (buyer).	The ownership of services cannot be transferred from one person to another.
Inconsistency	There is consistency in case of goods, as different customers get standardised demand fulfilled. For example, laptops.	There is inconsistency in services, as different customers have different demands and get their demands fulfilled accordingly. For example, different people need different services in salons.
Inseparability	The production and consumption of goods can be separated. For example, chairs are manufactured first and are used by consumers later after a while.	The production and consumption of services happen simultaneously. For example, eating food at a restaurant.
Inventory	One can keep goods in stock as inventory. For example, a warehouse full of watches.	One cannot keep services in stock as inventory. For example, getting a haircut at a salon.
Involvement	Involvement of customers at the time of delivery of goods is not possible.	There is involvement or participation of customers at the time of delivery of services.
Return	Once purchased, goods can be returned to the seller.	Once provided, services cannot be returned to the service provider.
Perishability	Goods can and cannot be perishable.	Services are perishable.

 

Ans 9 The Importance of Employee Marketing

Employee marketing has never been more important in the era of the great resignation. Focusing on your employee marketing strategy is important for many reasons. It has great benefits like greater employee engagement and improved productivity. It is critical in developing a great company culture, reducing turnover and attracting and retaining the best talent.

In turn, these benefits create great customer experiences and increases sales. It really is a win for all.

With organisations leading the way in advancing customer experiences, employee marketing strategies now play a significant role in their overall business strategy and business growth.

 

Employee marketing is not however the same as Internal communications. Internal communications tend to be from top down however employee marketing includes the approach and benefits to the employee of being part of the organisation. This in turn instils a sense of pride and ‘stickiness’ to the business by employees.

This stickiness turns employees into ideal brand ambassadors for an organisation. They know the organisation inside out and therefore are best placed to promote the benefits of working for, or buying from them.

Employee marketing includes keeping your team up to date with company activity, as well as attracting the best talent during your recruitment process. While recruitment is often run by the Human Resources department, it is important to engage your marketing teams and employees themselves in your approach to employee retention and acquisition.

Engaging your team in the recruitment process is an effective way of recruiting, as employees will only tend to recommend those they would be happy to work alongside or who align with their own work ethic.

 

Employee marketing engages teams and drives culture of the workplace by living the core values, mission and vision of the organisation. By prioritising your employees in your internal marketing strategy, you are demonstrating the importance of your employees being up to date, to your employees and potential future candidates.

Examples include:

On boarding programs

Wellness and employee engagement programs

Feedback forums

Brand training

Employee advocacy programs

Diversity and Inclusion support

 

Ans 10 Types of Servicescapes:

Is a framework for categorising service organisations on two dimensions that captures some of the key differences that will impact the management of the servicescape? Organisations that share a cell in the matrix will face similar issues and decisions regarding their physical spaces.

The physical setting may be more or less important in achieving the organisation’s marketing and other goals depending on certain factors:

(i) Servicescape Use:

First, organisations differ in terms of whom the servicescape will actually affect. That is, who actually comes into the service facility and thus is potentially influenced by its design—customers, employees, or both groups? There are three types of service organisations that differ on this dimension. At one extreme is the self-service environment, where the customer performs most of the activities and few if any employees are involved.

Examples of self-service environments include ATMs, movie theatres, express mail drop-off facilities, self-service entertainment such as golf and theme parks, and online Internet services. In these primarily self-service environments, the organisation can plan the servicescape focusing exclusively on marketing goals such as attracting the right market segment and making the facility pleasing and easy to use.

At the other extreme of the use dimension is the remote service, where there is little or no customer involvement with the servicescape. Telecommunications, utilities, financial consultants, editorial, and mail-order services are examples of services that can be provided without the customer ever seeing the service facility. In fact, the facility may be in a different state or a different country.

(ii) Complexity of the Servicescape:

Some service environments are very simple, with few elements, few spaces, and few pieces of equipment. Such environments are termed lean. Shopping mall information Kiosks and FedEx drop-off facilities would be considered lean environments because both provide service from one simple structure.

For lean servicescapes, design decisions are relatively straightforward, especially in self-service or remote service situations in which there is no interaction among employees and customers. Other servicescapes are very complicated, with many elements and many forms. They are termed elaborate environments.