Service Pricing and Marketing - Essay Example

Service Pricing and Marketing Services are performances involving economic activities that creates value andbenefits to the customers and are essentially intangible, this implies that there is no ownership of the factors of productions. It has proved hard to price these services because of: the service cannot be calculated per cost and can only be estimated thus financial costing is difficult, it is hard for customers to calculate because they do not get a monetary value in return and only based on satisfaction, it is hard to standardize pricing, the delivery of service depends and vary with customers perceptions and finally problems associated with time factor. Therefore the customer’s satisfaction and the perception of the service charged play an important role in determining the price (Christopher Lovelock). Price discrimination of services may take place when the service providers are price takers and can set their prices at the going rate, there are a strategies applied in price discrimination of services where these strategies involves setting the price for the first time these include: geographical pricing where different prices are charged to services in different locations depending on the distance, shipping costs and the need for counter trade; promotional pricing which involve different pricing on special events, loss leader pricing to increase sale of service, long term payments, psychological discounting and cash rebates which will increase the sale of services for a certain period (Christopher Lovelock). Price bundling is a marketing strategy which involves marketing of a number of several services as a package and general price is set for the whole package therefore increasing the service provision. The importance of this strategy is that customer’s benefits from bundles; they get discount, single billing and integration of services. For the providers they enhance customer value hence increasing their revenue and customer satisfaction. Price unbundling of services is a price strategy in which customers are charged per service provided hence customers acquire one service at a time. This in important because cost associated with a service can be determined, customers can access variety of services and finally it ensures that consumers who get more than one service are fairly charged (Christopher Lovelock). Customers have different preference in choosing channels of distribution when they want to get services; this variance is contributed by the effectiveness, efficiency and the reliability perception of the customer. Intermediaries role in service delivery are: they enhance reduction of selling and distribution costs of the services; there skills and knowledge enhance service delivery; they enhance customer satisfaction because of the interactions with various customers hence understanding their needs and finally they ensure that services are available to the customers because they have a wide knowledge of the market. Electronic distribution of services involves the incorporation of automation in service delivery by use of vending machines. This is common in many service providers because if its consistency and standardization of service delivery, lower costs, time saving and customer convenience and reliability. Internalization of services is a common current trend in most of the service firms; firms have expanded their service provision into the international markets through the establishment of business ventures and the forces behind this trend include: service provider firms and companies aims at increasing their revenues by venturing in the international business opportunities through subsidiaries and further exporting their services; There is the need for many service firms to seek for markets across the national borders this is attributed by the increase in the demand for some specific services in the international markets (Christopher Lovelock). There might be also low supply in the supply of services in some countries hence internalization is highly encouraged by the governments of these countries; The need of expanding the firm’s business activities and opportunities is also a major force behind internalization where firms expand their production, marketing related to service provision; there is the increasing need of service providers in seeking to gain the technical know-how in the international markets and finally is that there is also the need for firms to acquire a wider variety of skills, human capital and resources. This will improve service delivery and efficiency at a minimum costs. The channels of distribution among the Asian customers vary because of the available channels, the vastness in geographical location, infrastructural difference among the countries, and the accessibility of the available channels. Service blueprinting are customer focused marketing strategies that are developed in ensuring that there is an effective service delivery taking into account the customer and the offerer. This strategy is of benefit to the organization by providing guideline on the innovation and appropriate communication strategies. These strategies are important in identifying areas that needs to be emphasized in service delivery, customer needs and requirements and ensures that customer satisfaction is prioritized in service delivery. Support Service Teams (SSTs) provides support services to customers in a firm or an organization (Christopher Lovelock). Establishment of support service teams in service delivery is essential because it enhances customer relations management, identifies the customer trends and behavior, good relationship between the firm and the customers is enhanced thus facilitation effective service delivery. Blueprinting varies with different Asian customers because of the diversity that exist in terms of cultures and social classes each requiring a specific blueprinting strategy. Support service teams are important in providing services Asian customers as this will ensure that all the needs of the diversified customer base are met and all the market segment issues relating to the service delivery are well addressed (Christopher Lovelock). Jay customers are customers that are difficult to deal with and at times cause conflict in service delivery. The type of Jay customers include. The thief This type of customer has the tendency of not willing to pay for the services rendered to them, they set to avoid the payment or pay less and develop schemes to avoid payment. Service providers deal with this by having security within the premises and ensuring that theft security measures are put in place. Belligerent Customers These customers abuses the services of the employees and express resentment verbally, confrontations and even physical abuse. The service providers should train their employees on how to handle such situations and ensuring that they remove such customers from the public environment to avoid bad public image. Deadbeat Customers This customer intends to pay but eventually filing to pay. Service providers should asses the reason for not paying; insist on the payment by taking credit card number. Family Feuders customers This are customers who gets into argument with other customers mostly family members, this involves mostly with the employees family members who want to receive exceptional services. The firm should ensure that there is a strict code of conduct in the firm regarding service provision equality. Rule breaker These are customers who do not want to follow the set rules on service provision including queuing and the service encounter. The service providers should ensure that the rules are bureaucratic and not oppressing to some customers Vandal customer These are customers who vandalize the equipments of the service delivery including braking of furniture, destroying seats of bus and pouring drinks carelessly. The service providers should train its staff on handling the issues as well as placing important notes and instructions regarding the service provision (Christopher Lovelock). Demand management strategies in service provision are important in controlling the economical demand to ensure that there are no shortages of these services. These strategies are associated with the customer’s needs in the service provision. These includes innovation of new services thus enhancing customer choice variety, research and development on the new trends on consumer demands, integration of new technologies in the service delivery to meet the customer needs and finally is to design a framework in which all the customer records, needs, requirement and specifications are met (Christopher Lovelock). To complement the demand strategies are the capacity strategies in which involve the monitor and regulation of the service provision capacities which include: Identification of challenges arising from service capacities by developing proper measurement mechanism; Management approaches designed to ensure the issues underlying the overcapacity and under capacity are solved; Measures regarding the capacity issues in relation to the handling capacity of the service provider to ensure that there is no overstretching of the providers resources to ensure quality service delivery; Capacity adjusting measures which will ensure that the service providers are able to adapt the changing needs of the consumers and legal regulations and finally is the strategic management strategy which ensures that all the capacity problems projected can be flexibly handled by the service provider. These strategies will ensure that service providers handle customer’s tolerance in providing services more specifically in ensuring that they wait tolerably to be served. Servicescape is a marketing concept that is used to describe and explain the effects of the surrounding physical environment to the customer satisfaction. Customer’s satisfaction is a priority in service provision thus the environmental comfortability combined with tangible commodities contributes greatly to the overall satisfaction. The role of this concept is to enhance the understanding of service providers in ensuring that service provision facilities both exterior and interior such as landscape, parking, designs, air conditioning, premise layout and temperature regulations portray a positive impact to the customer. These combined with other tangible issues such as employee uniforms and business cards all contribute to enhancing customer relations and satisfaction (Christopher Lovelock). This concept is in the hotel and hospitality in some parts of India where it is characterized with high density of population and congestions of buildings. Service provision of quality hotel and hospitality has been undermined by the physical and the surrounding situation of the environment. Hotels and other service provider’s facilities are characterized with congestions, limited space, poor air conditions and high levels of environmental pollution. This has negatively impacted customer satisfaction on the services provided leading to most affected business service providers in these sectors losing customers (Christopher Lovelock) . Work cited Christopher Lovelock, Jochen Wirtz, Hean Tat Keh, Xiongwen Lu. Services Marketing in Asia. New York: Pearson International, 2005. Read More