ZENEX VISION GROUP OF EDUCATIONAL INSTITUTIONS SERVICE MARKETING

SEMESTER-V
SERVICES MARKETING

Unit-I: Introduction to Services:

Concepts, contribution and reasons for growth of the services sector,
difference in goods and services in marketing, characteristics of services ,
service marketing mix.

Unit-2: Customer Services:

Customer behavior in services, customer expectations in service , customer
satisfaction, strategies for influencing customer perception.

Unit-3: Customer Expectation of Services:

Marketing Research to understanding customers, different types of
customers, customer relationship management, benefits of customer
relationship, customer relationship in marketing.

Unit-4: Marketing Communication:

Meaning and definition of marketing communication ,importance, objectives
of marketing communication , role of marketing communication , product
delivery.

Unit-5: Building and Awareness:

Meaning, nature of Building Brand Awareness (BBA), how to improve brand
awareness, application of building brand awareness, building brand
awareness on social media.

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Unit-I: Introduction to Services:

Concepts, contribution and reasons for growth of the services sector,
difference in goods and services in marketing, characteristics of services ,
service marketing mix.
Unit-I: Introduction to Services:
Concepts, contribution and reasons for growth of the services sector,
difference in goods and services in marketing, characteristics of services ,
service marketing mix.
Services
We know that Industrial and Economic activities can be categorized
under three main groups: Primary (Agriculture, Fishing and Forestry come
under primary activities), Secondary activities include manufacturing and
construction) and Tertiary activities includes services and distribution. India's
services sector covers a wide variety of activities such as trade, hotel and
restaurants, transport, storage and communication, financing, insurance, real
estate, business services, community, social and personal services, and
services associated with construction.
Growth of Service Sector in India is perceptible and generating substantial
employment and contributing to the economy. In our daily routine will make
use of various type of activities like – For transit from one place to another,
we use bus, auto rickshaw, Uber or Ola etc; we go to salon in order to get
ourselves pampered (Haircut, Massage etc) Making a call to friend, relative
etc. getting food delivered at our requested address. Such activities are
called services because they involve an act offered by one party to another
for sale.
Definition of Services
According to American Marketing Association services are defined as
"activities, benefits or satisfactions which are offered for sale or provided in
connection with the sale of goods"
According to Philip Kotter and Bloom – "any activity or benefit that one
party canoffer to another that is essentially intangible and does not result in

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the ownership of anything. Its production may or may not be tied to a

physical product.
According to Zeithaml, Bitner, Gremler, Pandit – Services can be
defined in simple term as deeds, processes and performance provided or
coproduced by one entity or person for and the entity or person.

CHARACTERISTICS OF SERVICES
The characteristics of services grows, so does our ability to deal with them
from both an economic and marketing perspective. Services are intangible,
inseparable, variable, perishable, heterogeneous and results no ownership.
Each characteristic poses problems and requires strategies to deal with those
problems.
1. Intangibility: Typically, services cannot be touched, tasted, felt, heard,
or smelt prior to purchase. Before (and occasionally during and after) the
service delivery, the potential consumer cannot understand the service.
For many car repair customers, for instance, the service is entirely
invisible to them; they frequently cannot see what is being done and
many are actually unable to assess what has been done.
2. Inseparability: Services like carpet cleaning and plumbing can be
generated and provided in settings where the customer's presence is not
required. Some services, like distance learning courses, may rely more on
written communication than others, while others, like home banking, may
rely more on technology. There is always a chance that production and
consumption will be inseparable, regardless of the type and degree of
relationship.
3. Variability: Variability in service performance is an inevitable result of
simultaneous production and consumption. Depending on who offers the
service, as well as when and how it is delivered, the quality may vary. One
hotel offers a quick, effective service, whereas another nearby offers a
slow, ineffective service. One hotel staff is cordial and helpful, while

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another is haughty and impeding, in that hotel. Over the course of a day,
performance might vary, even within one employee.
4. Perishability: Services cannot be kept for sale or usage later due to their
perishability. Unused hotel rooms, unpurchased airline tickets, and unfilled
college spots cannot be claimed back. Services cannot be saved because
they are performances. When demand vastly outweighs supply, it cannot
be satisfied by moving products out of a warehouse, as in production.
Similarly, the revenue and/or value of that service is lost if capacity vastly
outweighs demand.
5. Heterogeneity: Despite the fact that conventional processes might be
employed, such as when handling a travel reservation, scheduling
servicing for a customer's car, or obtaining a quote for life insurance. A
service's individual "units" may vary from one another. Franchise
businesses make an effort to maintain a degree of uniformity, but it is
ultimately challenging to guarantee the same level of output in terms of
quality. Even if this factor also applies to some product marketing, it is
challenging for customers to evaluate quality before to purchase.
6. Lack of ownership: Because a consumer may merely have access to or
use a facility, there is a fundamental difference between a service
company and a product industry (e.g. a hotel room, a credit card).
Payment is required to access, use, or hire items. With the exception of
limitations imposed, say, by a hire purchase arrangement.
7. Cannot be Produced in Anticipation of Demand : Goods can be
produced in anticipation of demand. For instance, cars, computers, CDs,
etc., can be produced in advance and stored till they are demanded in the
market. However, services cannot be produced in anticipation of demand.
For instance, one cannot produce and stock hairstyles, airline travelling,
etc.
8. Cannot be Returned to Seller Once Used: A defective computer can
be returned back to the seller, but a defective hairstyle or poor quality of
teaching/ counseling cannot be returned back to the service provider.

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Because of this reason, consumer of services do prefer to take services of

highly skilled specialists, may be even quite a distance away.

MARKETING SERVICES VS GOODS: -

Services and goods are not equivalent. There are a number of salient
features that establish a clear-cut difference between the two something
which can be physically touched, verified, attracted or exchanged with or
even without making profits are known as goods. On this basis, goods are
food, clothes, books or other domestic and industrial items that can be
carried home, can be stored at a place and are tangible.
Goods
An item for sale is called a Good. Most importantly, it is a tangible physical
object. Goods can be bought, sold, stored, and transported. After the
transaction is complete, we can transfer the item, give it back, or even
exchange it for a different one.
Services
A service can be defined as an exchange that does not entail the physical
transfer of things from the vendor to the customer. In essence, it is work
performed on behalf of another person by one or more people. Services
include things like banking, health care, education, insurance, and
transportation.
Basis of Services Goods
Differences
Services cannot be produced Goods have a long storage
and stock piled (inventoried) life and are mostly non-

Perishability before consumption: they exist perishable

only at the time of their
productive.
Inseparabilit With regard to service, it is While goods are first
y
inseparable from the service produced, then sold and
provider and heterogeneous, finally consumed it is

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where each time the service is separable.

offered it may vary in quality,
output and delivery.
Services are highly variable Uneven quality of a product
because the quality of service made by the same
depends on who provides and manufacturer. A
where and when they are manufacturer is responsible
provided for producing products of
Variability
similar quality, and can be
held liable for those that
deviate materially from a
model, sample or standard

When a buyer purchases a When a buyer purchases

service, the buyer is something that is tangible.

Tangibility purchasing something that is For example, a computer.

intangible. For example, an
insurance policy.
More emphasis on trust and Less emphasis on trust and

Trust confidence as service confidence as product

performance is important. quantity is important.
Services by their very nature When one sells a product,
are time-intensive activities there is time invested to
because there is no way to create or acquire the product
Time
continue providing a service and then product and then it
without continuing to invest is sold again and again
time performing the service. without further time invested.
Deliverability Service must be created after When one is marketing,
they’re ordered, and delivery products, he can give
times will vary. The challenge customers a delivery date
with marketing services is estimate if they’re ordering

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being able to convince online or through the mail,

customers that one can and and they can walk out the
will deliver quality results door with the productive in
within a given period of time. hand if they buy it.
Services are rarely impulse Many products can be
buys. For example, A lawn care marketed in ways that trigger
service (or) includes impulse buying. For example,
Wants and convenience and free time as if someone sees a pair of
needs
part of their marketing shoes. He/she can suddenly
materials, to persuade buyers decide to buy them whether
sign up. they’re needed or not.
Marketing a service-based Marketing a product-based

Relationship business relies more on business relies less on

building a relationship. building a relationship.
Returnability Services are not returnable. Products are returnable.
Marketing a service adds three Marketing a product requires
more “p’s” to the traditional “4 what are known as the “4p’s”
Elements
p’s”. People, physical evidence, product, price, place and
and process. promotion.

Service Marketing Mix:

The marketing mix refers to the combination of idea, concepts and features
which put together best appeal to the target market segments. Market mix is
tailored to each target segment in order the meet the specific needs of
consumer in the individual segments. The conceptual framework of
marketing mix designed by the marketing mix comprises four elements,
product, price, Promotion and place. These elements include those marketing
variable that are directly controlled by the organization.
Definition of service marketing mix:
The marketing mix concept is a well-established tool used as a structure by
marketers. It consists of the various elements of marketing Programme

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strategy and Positioning in the company’s market. It is the important internal

elements (or) ingredience that make up an organization marketing
progamme.
Elements of Service Marketing mix: The product marketing mix consists
of the 4 P‟s which are Product, Pricing, Promotions and Placement. These are
discussed in my article on product marketing mix – the 4 P‟s.
The extended service marketing mix places 3 further P‟s which include
People,
Process and Physical evidence. All of these factors are necessary for
optimum service delivery. Let us discuss the same in further detail.

1. Product – The product in service marketing mix is intangible in nature.

Like physical products such as a soap or a detergent, service products
cannot be measured. Tourism industry or the education industry can be an
excellent example. At the same time service products are heterogenous,
perishable and cannot be owned. The service product thus has to be
designed with care. Generally, service blue printing is done to define the
service product. For example – a restaurant blue print will be prepared
before establishing a restaurant business. This service blue print defines
exactly how the product (in this case the restaurant) is going to be.

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2. Pricing – Pricing in case of services is rather more difficult than in case of

products. If you were a restaurant owner, you can price people only for
the food you are serving. But then who will pay for the nice ambience you
have built up for your customers? Who will pay for the band you have for
music? Thus, these elements have to be taken into consideration while
costing. Generally service pricing involves taking into consideration labor,
material cost and overhead costs. By adding a profit markup, you get your
final service pricing.
3. Promotion – Promotions have become a critical factor in the service
marketing mix. Services are easy to be duplicated and hence it is
generally the brand which sets a service apart from its counterpart. You
will find a lot of banks and telecom companies promoting themselves
rigorously. Why is that? It is because competition in this service sector is
generally high and promotions is necessary to survive. Thus banks, IT
companies, and dotcoms place themselves above the rest by advertising
or promotions. Because services are essentially intangible, marketing,
especially advertising, has great value for many services. Most services
don't have a place on a shelf; thus, advertising is the only way to get
noticed or heard.
4. Place (Distribution) - Frequently, the producer is located where the
service is received. Customers visit the dentist's office or a hair salon.
Because of this, location, or distribution, plays a crucial role in the
provision of services. The producer's services are no longer inseparable
from them as of late. Producers may now provide various services online
without clients physically visiting the service provider's site thanks to
technology. Consider banking services. Check deposits, money transfers,
and bill payments are just a few of the various operations that may be
done online.
Here on we start towards the extended service marketing mix.
5. People – People is one of the elements of service marketing mix. People
define a service. If you have an IT company, your software engineers

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define you. If you have a restaurant, your chef and service staff define
you. If you are into banking, employees in your branch and their behavior
towards customers defines you. In case of service marketing, people can
make or break an organization. Thus, many companies nowadays are
involved into specially getting their staff trained in interpersonal skills and
customer service with a focus towards customer satisfaction. In fact,
many companies have to undergo accreditation to show that their staff is
better than the rest.
6. Process – Service process is the way in which a service is delivered to the
end customer. Let’s take the example of two very good companies –
Mcdonalds and Fedex. Both the companies thrive on their quick service
and the reason they can do that is their confidence on their processes. On
top of it, the demand of these services is such that they have to deliver
optimally without a loss in quality. Thus, the process of a service company
in delivering its product is of utmost importance. It is also a critical
component in the service blueprint, wherein before establishing the
service, the company defines exactly what should be the process of the
service product reaching the end customer.
7. Physical Evidence – The last element in the service marketing mix is a
very important element. As said before, services are intangible in nature.
However, to create a better customer experience tangible elements are
also delivered with the service. Take an example of a restaurant which has
only chairs and tables and good food, or a restaurant which has ambient
lighting, nice music along with good seating arrangement and this also
serves good food. Which one will you prefer? The one with the nice
ambience. That is physical evidence. Several times, physical evidence is
used as a differentiator in service marketing. Imagine a private hospital
and a government hospital. A private hospital will have plush offices and
well-dressed staff. Same cannot be said for a government hospital. Thus,
physical evidence acts as a differentiator.

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The contribution of the service sector to the Indian economy

In FY 2023–24, the service sector not only remained the backbone of the
Indian economy but also played a catalytic role in exports, employment,
technological innovation, and inclusive development. With its continued
evolution and digitization, the sector is expected to remain central to India’s
journey toward becoming a $5 trillion economy.
1. Dominant Share in India’s GDP: The service sector remained the
largest contributor to India’s Gross Value Added (GVA), accounting for around
55% in FY 2023–24. This dominant position highlights the transformation of
the Indian economy from an agrarian-based system to a service-led model.
Sub-sectors like financial services, real estate, trade, and public
administration have been major contributors. The growth in services has
outpaced both agriculture and industry, making it the core engine of
economic activity and value generation.
2. Higher CAGR and Rapid Growth of Services Sector: The importance
of services sector to Indian economy can also be traced from its attainment
of higher compound annual growth rate (CAGR). The CAGR of the services
sector grew by approximately 8.3% in 2023–24, which was higher than the
overall GDP growth of around 7.6%. This growth was driven by high-
performing segments such as information technology (IT), business process
outsourcing (BPO), telecommunications, aviation, hospitality, and digital
services. This robust expansion reflects rising domestic consumption,
urbanization, and digital penetration.
3. Employment Generation and Human Resource Absorption: The
service sector has become a significant employment generator in India. In
2023, it accounted for about 31.5% of total employment. With the rise of
sectors like healthcare, education, tourism, e-commerce, and financial
services, jobs are being created across urban and semi-urban areas. The
service sector also offers more formal employment opportunities and higher
wages compared to agriculture.

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4. Surge in Services Exports: India’s services exports reached an all-time

high of $383.5 billion in FY 2023–24, growing by more than 12% from the
previous year. Software services (e.g., IT and ITES), consulting, engineering,
legal, and travel-related services were key contributors. The trade surplus in
services reached approximately $188.6 billion, helping offset the
merchandise trade deficit and stabilizing India’s current account balance.
5. Inflow of Foreign Direct Investment (FDI): The service sector
continued to attract the highest share of FDI in India. In FY 2023–24, India
recorded total FDI inflows of $70.9 billion, with significant investments in IT,
telecom, fintech, banking, and insurance. The consistent liberalization of FDI
norms in these areas has made India a favorable destination for global
investors.
6. Urbanization and Infrastructure Development: Growth in the
services sector has stimulated urbanization and the development of physical
and digital infrastructure. Increased demand for office spaces, commercial
real estate, and smart urban services has led to city expansions and
improvement of logistics and mobility systems. For instance, urban
infrastructure projects like the ₹18,000+ crore mobility plan for Nagpur
illustrate how services are shaping city development.
7. Technological Advancement and Digital Transformation: The service
sector, particularly IT, fintech, and digital platforms, has been at the forefront
of adopting and advancing technology. Government programs such as
“Digital India” and private-sector investments have enabled rapid adoption
of cloud computing, AI, cybersecurity, and blockchain. These technologies
are improving service delivery across banking, education, healthcare,
logistics, and even agriculture.
8. Support to Agriculture and Industry: Service-based industries such as
logistics, warehousing, banking, insurance, market analytics, and digital
platforms provide crucial support to primary and secondary sectors. For
example, agri-tech startups and financial inclusion initiatives have improved

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farmer access to credit, insurance, and markets, while supply chain

management services support manufacturing and retail distribution.
9. Inclusive Growth and Regional Development: The spread of service-
based employment and business opportunities to tier-2 and tier-3 cities has
helped reduce regional disparities. Cities like Jaipur, Kochi, Coimbatore, and
Bhubaneswar are emerging as new service hubs. BPOs, education centers,
and healthcare facilities are expanding beyond metros, creating more
balanced economic growth across regions.
10. Influence on Policy and Economic Reforms: The rise of the service
sector has driven significant policy interventions and economic reforms.
Government initiatives such as Startup India, Skill India, and the
liberalization of regulations in sectors like telecom and finance are designed
to strengthen and formalize service-based enterprises. The success of the
service sector has also inspired reforms in labor laws, digital governance,
and taxation (e.g., implementation of GST on service providers).

Reasons for growth of service sector in India

The growth of the service sector in India is the result of a unique combination
of demographic strengths, economic reforms, technology adoption, and
evolving consumer behavior. As India continues its development trajectory,
the service sector is poised to remain the backbone of its economy. Let us
know see what are the factors contributing to the growth of the Service
sector in India.
1. Government Policies: Government has taken lot of initiatives to
promote the service sector in India. Especially after the economic reforms
of 1991, we have seen some significant steps taken by the government to
promote the service sector in India. Government regulations and
privatization has given a boost to the service sector in India.
2. Social Changes: the last 2 decades in India has seen a radical change in
the behaviour and expectations of the consumers. The expectations of the
Indian consumers are an ever high. We have seen the ever growing and

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highest number of affluent people in India in the new millennium. Now

consumer are not only purchasing the product but now they look for an
experience. Example: Starbucks not only sell one of the finest roasted
coffee but also provides an incredible expressive which they call as an
“Starbucks Experience” to their customers. The world’s largest coffee
chain believes to provide an outstanding customer service to their
customers.
3. Business Trends: The trends of during business is also changing rapidly.
The manufactures are now adding value through services. The corporate
has initiated the total quality revolution. Now the companies aims at
providing better quality of services in each and every tough point to their
audience. The growth in the franchising business add yet another
dimension to improve and standardise the services. Example:
McDonald’s never compromise on their QSCV (Quality, Service,
Cleanliness and Value) principles while giving their franchise. The
franchisee and the staff are trained by the company to provide the
standard service throughout the chain of the Mcdonald’s .
4. Advances in Information Technology: The growth of Internet has
immensely benefitted the service firms to improve the service. The
convergence of computers and telecommunications has proved to be a
boon for the service firms and customers. It becomes easier and faster for
the service firms to provide quality services to the customers. Example:
ICICI Bank offered instant Account opening services to their customers
whereby the sales executive of ICICI go to meet their customer with a
tablet where the executive can click the photograph of the customer, fill
up the account opening form instantly and open a Bank Account then and
there.
5. Internationalization: After opening up of the boundary through
globalization, we have been some service excellence firm to come to
India, Companies like Dell, Samsung, Accenture, IBM, etc are working on a
transnational basis and assimilate the best practices across globe and

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raise the level of service provided to the customers. International mergers

and acquisitions are yet another contributing factor for the growth of the
service sector.
6. Financial Sector Development and Inclusion: Financial services such
as banking, insurance, mutual funds, and digital payments have seen
rapid expansion. Financial inclusion initiatives like Jan Dhan Yojana, UPI
(Unified Payments Interface), and Aadhaar-based services have brought
millions into the formal financial system, expanding the consumer base
for various financial and allied services.
7. Rapid Growth of the IT and ITeS Industry: India’s emergence as a
global IT and IT-enabled services hub is a major factor in service sector
expansion. With a large pool of English-speaking, tech-savvy talent, India
became a preferred destination for outsourcing. Cities like Bengaluru,
Hyderabad, and Pune evolved into IT corridors. The growth of software
development, BPOs, cloud computing, and now AI and cybersecurity
continues to fuel the sector.
8. Government Initiatives and Public Investment: Schemes such as
Digital India, Startup India, Make in India (for service exports), Smart
Cities Mission, and PM Gati Shakti have directly and indirectly contributed
to service sector growth. These initiatives improve digital infrastructure,
promote entrepreneurship, enhance ease of doing business, and attract
foreign investments into services such as logistics, education, healthcare,
and professional services.
9. Growing Global Demand for Indian Services: Indian IT, financial,
legal, and consulting services are in high demand globally. Service exports
have grown steadily due to India’s cost competitiveness, quality delivery,
and reputation in outsourcing. The global shift toward digitization and
remote work has further boosted demand for India’s software and
knowledge-based services.
10. Rise of Entrepreneurship and Startups: India’s startup ecosystem—
especially in services like fintech, edtech, logistics, and healthtech—has

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flourished over the past decade. Supportive regulatory frameworks,

incubators, access to venture capital, and a large domestic market have
allowed service-based startups to scale rapidly. Unicorns like Paytm,
BYJU’S, Zomato, and Nykaa exemplify this service-driven growth.

Unit-2: Customer Services:

Customer behavior in services, customer expectations in service , customer
satisfaction, strategies for influencing customer perception.
Consumer behaviour
The study of people, groups, or organisations and all the behaviours
connected to the acquisition, consumption, and disposal of products and
services is known as consumer behaviour. Consumer behaviour refers to how
a person's feelings, attitudes, and preferences influence their purchasing
decisions. The formal study of consumer behaviour examines individual traits
like demographics, personality lifestyles, and behavioural variables (such as
usage rates, usage occasion, loyalty, brand advocacy, and willingness to
provide referrals) in an effort to understand people's desires and
consumption habits.ty, brand advocacy, and willingness to provide referrals).

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Consumer behaviour varies as a result of evolving fashion, technology,

trends, lifestyles, disposable money, and similar other variables. To
coordinate marketing efforts appropriately, a marketer must be aware of the
aspects that are changing.
According to Engel “Consumer behavior is the actions and the decision
processes of people who purchase goods and services for personal
consumption”.
According to Louden and Bitta, “consumer behaviour is the decision process
and physical activity, which individuals engage in when evaluating,
acquiring, using or disposing of goods and services”.
Consumer behaviour in services
The primary objective of any primary producers or marketers is identical to
that of all marketers, to meet consumer needs and wants thus ensuring own
economic survival. Service marketer need to close the customer gap
between expectations and perceptions. Thus, customer is the main reason
for existence of the service firms. Without an understanding of the consumer
it would be impossible for the marketer to deliver the offer. The consumer
behaviour needs to be studied as the consumer’s mind is like a “Black Box”

Black Box Effect

The marketer can try to stimulate the consumer but is not sure which way
the buyer would react: to buy or not to buy the offer. All that the marketer
can study are all the external stimuli acting on the consumer and his
responses. The external stimuli are of two types:
1. Those controlled by the company through its marketing mixes like the
offer, price of sale, advertising, special promotions like freebies, add-on
or celebrity endorsements.
2. Those which are social sources, like word-of-mouth and emanating
from reference groups which have strong recommendations effect.

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Buying Situations Faced by the Consumer: Customers find

themselves in different buying situations, from purchase- to-purchase and
service transaction to service transaction. For example, two trips to retail
banks for two different purposes may not lead to same purchase decision.
The second buying situation will vary greatly from the first because of the
following reasons:
1. The customer is aware of the service product category and service
brands.
2. The customer has definite decision-making criteria about the
purchase of the service offer.
The customer is competent enough to evaluate the service offer and also has
definite evaluation criteria. For example, Mr. Kamath, a restaurant
connoisseur, knows about food and its cost across different restaurants and
can instantly evaluate seeing the menu, décor and service personnel, he is
well aware that a certain dish, perfectly cooked, tastes like and what it
should cost in that particular restaurant.
If all the conditions persists, then the customer is knowledgeable aware and
confident. He does not need to be highly involved with purchase and
transaction. The marketer can also appropriately tailor his communication
and marketing directly to the customer. If the three differentiating conditions

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persists in two or more buying situations then the buying situations are
same. Thus, more than the service product, it’s the buyer’s decision-making
ability that differentiates one buying situations from another. The three
buying situations are:
1. Straight re-buy or routinized response behaviour: Here the
customer comes for the rebuy of the same service product, e.g., bank
draft. Here all the three conditions of differentiation are met. He is aware
of the service product category as well as the brand. The purchase is of
daily or frequent necessity. He has low involvement with the purchase
process.
2. Modified re-buy or limited problem-solving: In this situation, the
customer does not meet one or more of the differentiation criteria.
He/she may be aware of the category or brand but not the new version
or the form.Then there is a small amount of problem-solving for the
customer. Example, Mrs. Iyer may go for usual treatment to the beauty
parlour but the beautician may draw her attention to some other new
treatment. Mrs. Iyer would then enquire about its extra benefits and also
the cost.
3. Extensive problem-solving or critical problem-solving or new
tasks: A customer will be in this buying situation when the offer is
totally unfamiliar, and he is not clear either about its decision criteria or
its evaluation criteria. This is because of his lack of knowledge about the
offer. In this situations two or three conditions are not met. This happens
for most service offers like a vacation package tour, insurances. The
consumer is most of the time not aware of the destination or its
promises. Neither is he clear about the criteria of decision-making.
These are high involvement purchasing processes and the customer
would require a lot of time for information search as well as decision-
making.
The Consumer Decision Process:

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A service marketer should understand the buying process and the different
influencing factors. The consumer decision process helps to structure our
thinking and to guide our understanding regarding consumer behavior.
Stages in consumer decision-making
1. Need Recognition
2. Information Search
3. Evaluation of Alternatives
4. Purchase and Consumption
5. Post-purchase Evaluation
1. Need Recognition: The process of buying a service begins with the
recognition that a need or waste exists. Although there are different ways
to characterize needs the mostly accepted theory is Maslow’s hierarchical
need theory, which specifies five needs categorized in a sequence from
lower level needs to higher level needs. The five needs are physiological,
safety and security, social, ego and self-actualization. The service marketer
should recognize primary needs and be ready to service secondary needs.
Need Recognition may be based on a shortage (a need) or on an unfulfilled
desire (a want). For example, if the consumer is motivated by a commercial
cue to pursue a college degree and is not currently enrolled in a university,
then a shortage exists. In contrast, if the consumer is currently enrolled in a
university and no longer values that particular institution but still would like
to complete their degree at an another university, then an unfulfilled desire
exists. Finally, if the consumer does not recognize a shortage or unfulfilled
desire the decision process stops at this point.
2. Information Search: During the information search phase, the consumer
collects information regarding possible alternatives that will ultimately
resolve the consumer’s problem. In college selection example, the
consumer may first engage in an internal search. An internal search
accesses the consumer’s own memories about possible alternative
colleges. In this example, the previous knowledge may be based on the
proximity to a local college, information obtained while watching local

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sporting events, or listening to older family members reminisce about their

own college experiences. An internal search is a passive approach to
gathering in formation. The internal search may be followed by an
external search, which would in volve the collection of new information
obtained via campus visits, talking to friends, and/or reading specific
magazines that rate universities on an annual basis. Based on internal and
external search processes the consumer works their way through a possible
broad range of alternatives and narrows their search from an awareness set
to an evoked to a final consideration set of alternatives. The service
marketer should take care to be apart of the consideration set so as not to
miss out benefits.
3. Evaluation of Alternatives: Once relevant information has been
collected from both internal and external sources, the consumer arrives at
a consideration set of alternative solutions to resolve the recognized
problem. The possible solutions are considered in the evaluation of
alternatives phase of the consumer decision process. This phase may
consist of a nonsystematic evaluation of alternatives, such as the use of
intuition—simply choosing an alternative by relying on a “gut-level
feeling”—or it may involve a systematic evaluation technique, such as a
multi-attribute choice model. Such systematic models utilize a set of
formalized steps to arrive at a decision. Marketing theorists have made
extensive use of multi-attribute models to simulate the process of
evaluating products. According to these models, consumers employ a
number of attributes or criteria as basic references when evaluating a
service. For example, consumers may compare alternative universities
based on location, tuition, admission requirements, academic reputation,
degree programs, and sports programs. Consumers compute their
preference for the service by summing the scores of the service on each
individual attribute.
4. Purchase and Consumption: During this purchase and consumption
stage, the consumer may make a store choice—deciding to purchase from

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a particular outlet, or a non-store choice—deciding to purchase from a

catalog, the Internet, or a variety of mail-order possibilities. This decision is
accompanied by a set of expectations about the performance of the
product to be purchased. In the case of goods, the consumer then uses the
product and disposes of any solid waste remaining. The activities of buying,
using, and disposing are grouped together and labeled the consumption
process. Understanding consumers’ choice or purchase alternatives is
important for managerial decision making. For example, banking services
traditionally were only available at a centrally-located bank. Over the years,
consumers have now become accustomed to con ducting banking activities
electronically via ATMs or online banking, or at grocery stores through
branch banks that are physically located conveniently within the store
itself.
5. Post-purchase Evaluation: Once a purchase has been made and as the
product, whether a service or a good, is being consumed, post-purchase
evaluation takes place. This reaction takes place after the purchase and
usage. The customer has two types of reactions: Pleasure and pain. In
service delivery is below expectation the customer is disappointed,
dissatisfied and experiences pain. If the service is as expected by the
customer then the customer is satisfied. But if the service delivery is
beyond expectation, the customer is delighted. As consumer participate to
a greater extent in the definition and production of services they feel more
responsible for their dissatisfaction. During this stage, consumers may
experience varying levels of cognitive dissonance—doubt that the
correct purchase decision has been made. Marketers often attempt to
minimize the consumer’s cognitive dis sonance by reassuring the customer
that the correct decision has been made. Strategies to minimize cognitive
dissonance include after sale contact with the customer, providing a
reassuring letter in the packaging of the product, providing warranties and
guarantees, and reinforcing the consumer’s decision through the firm’s

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advertising. Post purchase evaluation is all about customer satisfaction, and

customer satisfaction is the key outcome of the marketing process.
Customer Expectations in service
The word "customer expectation" refers to everything a customer expects
from a product, service, or business. Customer preferences are formed in the
minds of consumers based on their personal experiences and lessons
learned, as well as their prior knowledge and experience. Further it also
refers to the perceived value or benefits that seek when purchasing a good
or a service.
Customer expectations play key role in a company s success. They have
a deeper meaning in services marketing than being mere requirements of a
customer. They may also involve customers predictions of what will happen
in a service encounter or what the customers desire to happen. Customer
expectations are based on customers experience with the product or service;
feedback received from friends, colleagues, and relatives; or may be based
on their present needs.
Customers do not expect service providers to fulfil all their requirements
but only that they deliver what they have promised. They want to get a fair
deal for the price they pay for the service.
Example: Insurance customers often find that most of their requirements
are not met by insurance policies due to exclusion clauses. This tends to
confuse the customers as to what is actually covered by the insurance policy.
Customer service expectations can be measured along five
dimensions of service quality: assurance, empathy, reliability,
responsiveness and service tangibles. Except for the dimension of reliability,
which is associated with the service outcome, all other dimensions are
associated with the service process.
The five dimensions are:
 Reliability: This refers to the ability of the service provider to
accurately perform the promised service. This dimension of service
quality conveys whether the service provider keeps his promise

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regarding the efficient delivery of service, handling of customer

complaints, pricing and so on.
 Assurance: It is the ability of the service provider and his employees to
use their knowledge and courteous behaviour to instil crust and
confidence in customers regarding the service.
 Tangibles: This dimension of service quality refers to those elements,
which provide tangibility to the service and include physical facilities,
equipment of the service provider, dress and appearance of the service
personnel.
 Empathy: It refers to the service provider s ability to show concern for
customers and devote individual attention to each customer.
 Responsiveness: It refers to the willingness of the service provider and
his staff to provide assistance and prompt service to customers.

Different type of customer expectations

Customer expectations of service can be of two types: desired service and
adequate service.
Desired Service
It is defined as the service that a customer desires and hopes to receive. In
other words, the desired service expectations of a customer are a
combination of what he/she feels that a service provider can offer and should
offer. Desired Services is a blend of what customers desires or believes "can
be" or "should be" The level of services the Customer hopes to receive – the
"wished for" level of performance. Desired service expectations of a
customer increases when the customer is experienced and has good
knowledge of what to expect in the service.
For Example: Student who join a high ranked B–School expects the school
to have scholarly faculty, a curriculum that improves their competency, and
above all secure them good placements.
Adequate Service

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Adequate service is the minimal level of service that a customer is willing to

accept from a service provider and is based on the customer s perception of
what level of service is acceptable to him. As customer are aware that they
cannot always get the desired level of service quality on such occasion
customer expect minimum Level of service. We call it threshold level of
acceptable service. A customer s expectations of adequate service change
with his perception of the available alternatives for the particular service.
Customers expectation of adequate service increases in situations of an
emergency.
For Example: When one travels in a low-cost airline, one does not expect
the airline to provide sumptuous food in flight or any other luxuries other
than fulfillment of one’s expectation of reaching the destination.

If the service offered is better, than the desired service, the customer may
be very pleased or very satisfied whereas if the service offered is below the
adequate service, then the customer may feel highly dissatisfied or unhappy.
Zone of Tolerance: Defined as the difference between desired service and
the level of service considered adequate. But within the Zone of Tolerance
quality doesn't get much attention. We know that services are
heterogeneous and the way in which services are performed differ from
employee to employee but customer also plays a major role as customer is

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also a part of service production. The extent to which customers recognize

and are willing to accept this variation is called zone of tolerance.
For Example: When one applies for a bank loan, getting the loan sanctioned
within reasonable time may be rated as service quality within the Zone of
Tolerance. But the customer will be delighted if a relationship executive call
on him and collect the documents and gets the loan sanctioned at the
earliest. Basically
Zone of Tolerance varies across customers. Even it can vary across
situations. When one is in a hurry and waits in a queue for boarding and
check in, he may feel frustrated and rate services quality poorly. The same
customer may show more Tolerance if he was not in hurry.

Determinants/influencers of customer expectations:

The zone of tolerance concept is based on two levels of service expectations:
desired and the adequate levels. It is important for the marketer to develop
an understanding of factors that influence and determine these expectations.
Desired Service: A customer desired service expectations are influenced by
two factors: personal needs and enduring service intensifiers.
Personal needs are connected to a person’s physical, social and
psychological well-being. For a customer who has got late for the office, his
or her desired service from a taxi operator is about speed with which he or
she can be taken to destination (functional). On the other hand, a customer
who wants to pick his date would desire the taxi to be socially appealing and
comfortable. Desired service expectations are directly influenced by the
needs that dominate or have powerful influence in a given consumption
situation.
Enduring intensifiers factors that increase the sensitivity to service. Two
factors that lead to increased sensitivity to service are derived service
expectations and personal philosophy.
Derived service expectations: Sometimes customer expectations are
driven by other person (to whom one feels accountable or answerable to

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seeks to please or impress) as it may be a case when one wants to hold a

business meeting to forge a collaboration with outside company. Here, the
service expectations of the customer are likely to be affected by
expectations of outside delegates and business partners.
Personal philosophy is another enduring intensifier responsible for
heightened service sensitivity. This refers to a customer’s very personal
ideas or attitude about service. Some women are driven by a strong notion of
hygiene in choosing a restaurant. Accordingly, their desired service
expectations are constructed with a heavy concern about hygiene.
Adequate Service: Adequate service level represents the bottom-level
expectations below which the service delivery becomes unacceptable. Five
factors are proposed to influence adequate service expectations: transitory
service intensifiers, perceived alternatives, self-perceived role, situational
factors and predicted service
Transitory factors: Th ese are short-term factors which influence adequate
service level. For instance, in emergencies, the adequate service level is
likely to go up (ambulance service when someone suffers from heart stroke
or police assistance when a burglary takes place). In these situations,
customer would be less tolerant to a deviation from the expected level
(lower ZOT), because the adequate service level moves up closer to desired
service level.
Perceived alternatives: Substitute’s availability is likely to influence
adequate service level. In the absence of substitutes, customer’s adequate
service level is likely to go down and they accept poor quality. For instance,
customers were used to accepting poor quality in airlines and
telecommunication when the industries were not liberalized. When
substitutes are available, the adequate service level is likely to go up and
thereby reduces the zone of tolerance.
Self-perceived role: Customers play role in service creation such as
patient’s participation in physiotherapy or specifying type of food to be
prepared in a restaurant. When such role is performed well by the customer,

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then adequate service level is likely to move up, and the customer is likely to
be less tolerant of failures (narrow zone of tolerance) than when fails to
perform their role, consider a serious attentive student (well performed role)
in the class compared to inattentive, non-serious student (shoddy role
performance).
Situational factors: Situations which are perceived to be outside the
control of service provider like natural disasters or other emergencies can
pull down adequate service level and increase zone of tolerance. For
instance, passengers become tolerant of delays caused by fog compared to
situations when delays stem from controllable factors.
Predicted service: It refers to the service level that customers believe what
they are likely to get from a service provider. This implies some kind of
predictions that customer makes about a service based on some objective
calculation of anticipated level of service. Predicted service influences
adequate service level. Good predicted service level is likely to more
adequate service level higher.
Customer satisfaction
Customer satisfaction is described as a customer's assessment of a product
or service in terms of whether it met their needs and expectations. It is
believed that failure to fulfil needs and desires would lead to dissatisfaction
with the product or service. Depending on the context or form of service,
satisfaction may be linked to other emotions.
“Customer satisfaction/dissatisfaction is that it is a comparison of customer
expectations to perceptions regarding the actual service encounter.”
“Customer satisfaction is defined as a measurement that determines how
happy customers are with a company’s products, services, and capabilities.”
Concept of satisfaction
The concept of satisfaction is the comparison between what customer
expects from a product or service to deliver and actual delivery. The pre-
consumption or use expectations serve as standards against which actual
perceived performance is compared. Satisfaction is a judgment that

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consumer begins to make once the consumption begins to happen. This

comparison may yield two types of situations (See figure) met expectations
and disconfirmed expectations.
The satisfaction framework literature proposes:
 Met expectations: when delivery is according to expectations this
results in moderate satisfaction or when expectations are met.
 Unmet expectations: results in dissatisfaction when the expectations
are not met and there is under-delivery; but high satisfaction achieved
are not met in the positive sense, i.e. delivery exceeds the expectations

Satisfaction can be viewed as

(1)contentment (more of passive response that customer may associate
with the service they do not think a lot about or services that they
receive routinely over time)
(2)pleasure (that make the customer feel good or are associated with a
sense of happiness),
(3)delight (Services that surprise the customer in a positive way),
(4)relief (removal of negative leads to satisfaction, ambivalence)
Customer Satisfaction is influenced by the following features.
(1)Product and Service Features: Customer Satisfaction is influenced by
the customer's evaluation of product or service features.
(2)Customer Emotions: Customer Emotions can also affect their
perceptions of satisfaction with product and services.

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(3)Attributions for Service Success or Failure: Customers' evaluations

of the outcome will affect their satisfaction when they are shocked by an
outcome such as the service being much better or much worse than
anticipated.
(4)Perception of Equity or Fairness: Satisfaction of the customer also
depend on the equity or fairness. Notions to the fairness are central to the
customer perceptions of satisfaction with products and services,
particularly in service recovery situation. Customer ask themselves: Have
I been treated fairly compared with other customer? Did other customers
get better treatment, better prices, or better-quality service?
(5)Other customers, family members and Coworkers: Other than the
service features, customers are also influenced by other people. E.g.: The
family's choice of vacation destination and satisfaction with the trip are
complex phenomena affected by individual family members' reactions
and emotions. Later, stories retold within the family and selective
memories of the events can affect what family members convey in terms
of satisfaction or disappointment with the trip.

Customer perceptions of services

Perception is the process of making a meaningful picture by selectively
organizing a set of stimuli. Perceptions change over time, differ from person
to person, and from one culture to another.
Customer Perception refers to the consumer's feelings about the
brand/Product or services. It includes their beliefs, expectation, experiences
with the services, whether they have experienced quality service and
whether they are satisfied with the service. Perception is based on
expectation, and expectations are dynamic; evaluations of services may also
shift over time–from individual to individual and from culture to culture.
Quality services that satisfy customers today may change over a period of
time or may be different tomorrow.

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“Perception can be defined as a customer’s judgment about the service

experience and pertains to the aspects of value of service delivery, service
quality and customer satisfaction.”
Factors Influencing Customer Perceptions
Customer perceptions of value, quality, and satisfaction are influenced by
four important factors. They are service encounter, service evidence,
image, and price. These factors are discussed in detail.
1. Service Encounters: Customer perception of service quality is primarily
influenced by the service encounter. A customer estimates the quality of
service throughout his/her interaction with a service provider. Every
incident in the service encounter sums up the customer s satisfaction and
his intention to repeat business with the service provider. Generally,
researchers believe that the first encounter can be critical in a
transaction. If a customer is not satisfied in the first encounter, he may
never return to do business with that particular service provider.
Example: if a person who visits an insurance company for settlement of
his claim is not received properly by the employees of the company, he
may not like to take any more insurance coverage from the company.
There are three types of service encounters: Remote encounters,
Phone encounters and Face-to face encounters.
 Remote Encounters: Remote encounters do not involve any direct
human contact. Example: ATM machines, telephone answering
machines, voice mail service, automated mail order service, and
obtaining billing information on an automated service/line.
 Phone Encounters: Over the years, the use of telecommunications has
increased significantly. Companies have started offering telephonic
services like customer inquiry, registration of complaints, taking orders,
and reserving tickets. Example: Service companies like utilities,
insurance, telecommunications, and banking are using
telecommunication facilities to provide service to customers.

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 Face-to-face Encounters: Face-to-face encounters involve direct

human contact between a service provider and a customer. Example:
These types of encounters occur in places like restaurants, banks, and
grocery stores.
2. Service Evidence: Service evidence is another factor that influences
customers perception about a service. The intangibility characteristic of
services makes customers look for evidences of the service in every
interaction with the service provider. If a service provider fails to manage
the service evidence, then there is a possibility that he may
unintentionally convey the wrong message to his customers, which will
have a negative effect on customer perceptions. Therefore, service
providers must manage even the minute tangible clues associated with
their service, as customers will have certain perceptions about the
evidence of the service on the basis of these clues.
 Service Personnel: It is the first type of clue which plays an important
role in defining the quality of a service encounter in the mind of the
customers. The ability of the personnel to be enthusiastic, friendly, and
spontaneous will make the service experience a pleasant one for
customers. Example: Fast-food restaurants such as McDonald s make
their service tangible, by hiring people who are friendly and have a
pleasing appearance, to serve customers.
 Process of Service Delivery: It is the second type of service evidence.
It involves various steps in the process of delivering a service, and the
flow of operational activities. The service process is also evaluated on
the basis of the number of flexible or standard policies, and the
technological or human modes involved in delivering the service.
Processes have been made simpler and flexible with the help of
advanced technology.
 Physical Environment: It is the third type of service evidence that
creates an impact on customer perceptions. The physical environment
consists of the ambience offered by a service provider, and the design of

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the interiors or exteriors of the service facility. Example: A couple who

want to dine at a restaurant that offers a quiet and serene ambience,
would avoid going to a crowded restaurant as they perceive that the
restaurant is always noisy due to the large number of people it caters to.
The design of the interiors has the capability to give rise to a positive
perception about the service.
 Shaping the First Impression of the Customer: A customer who
does not have any information about a service will look for tangible
clues to assess the quality of the service. Customers believe in what
they see and form an opinion about the service organisation and the
service on the basis of what they see.
3. Image: A customer s perception of the service quality is also dependent
on the image of a service organisation in the mind of the customer.
Organisational image is the customer s perception about an organisation
and this may be either at the local level or at the corporate level. A
customer who has a positive image about a company is likely to ignore
some instances of poor service. However, repeated bad experiences will
damage the image of the company in the eyes of the customer. In
contrast to this, if the customer has a negative image of the service
organisation and if the organisation fails to provide proper service, it will
further add to the negative image of the organisation in the mind of the
customer and result in dissatisfaction.
4. Price: The price of a service has an impact on customer perception of the
service. The price of a service influences customer perceptions of value,
quality, and satisfaction. Due to the intangible nature of services,
customers often assume price as an indicator of quality of service. If a
service organisation prices its service low, customers may doubt its
quality. On the other hand, customers have expectations of high quality if
a service is priced high. Customers may also assess the value of a service
in relation to its price after consuming the service.

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Unit-3: Customer Expectation of Services:

Marketing Research to understanding customers, different types of
customers, customer relationship management, benefits of customer
relationship, customer relationship in marketing.
Marketing Research
Over the past few years, marketing of services has picked up pace and
became popular worldwide. Service organisations largely compete on the
basis of the quality of service provided by them. While some companies
successfully deliver quality service to their customers, others are just
clueless. Providing quality service is based on a service organisation s
understanding of customer expectations and its willingness to meet or
exceed these expectations.
“Marketing Research is the process of systematically and objectively
identifying, collecting data on the environment and the market and
translating them into information that can be used by marketers to make
better quality decisions.”
The service marketer uses this knowledge-based information to find out the
customer expectations and perceptions, and design his marketing
programmes.

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Marketing Research to understand customers

Marketing research is the backbone of customer understanding in service
marketing. It transforms subjective assumptions into data-driven insights. By
applying research tools effectively, service providers can design better
customer experiences, increase satisfaction, and gain competitive advantage
in a market where service quality often defines success. Marketing research
is a necessary and useful analytical tool for service firms for to understand
customers the following reasons:
1. Understanding Customer Needs and Expectations: Marketing
research helps service providers discover what customers truly need and
expect. Since services are intangible and often consumed at the same time
they are produced (e.g., in a hotel, hospital, or classroom), the customer
experience becomes central. Example: A hotel might conduct surveys to
understand whether guests expect digital check-in, eco-friendly options, or
personalized room preferences.
2. Identifying Customer Perceptions and Attitudes: How customers
perceive a service—in terms of quality, reliability, and trust—is a major driver
of satisfaction and loyalty. Marketing research tools such as interviews, focus
groups, and satisfaction surveys help uncover these perceptions. Example:
A healthcare clinic might use feedback forms to understand how patients feel
about the friendliness of the staff or the cleanliness of the facility.
3. Segmenting the Market: Not all customers are the same. Marketing
research allows service marketers to segment customers into groups based
on demographics, behavior, or preferences. Each segment can then be
targeted with tailored services or communications. Example: An online
tutoring service may segment its customers into school students, college
students, and working professionals to offer customized learning solutions.
4. Measuring Customer Satisfaction: Customer satisfaction is a key
performance indicator in service marketing. Marketing research provides
tools such as Net Promoter Score (NPS), customer satisfaction indexes, and
feedback analysis to gauge satisfaction levels. Example: A restaurant might

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send digital surveys to diners post-visit to measure satisfaction with food,

ambiance, and service speed.
5. Tracking Customer Behavior: Through both qualitative and quantitative
research methods, businesses can understand how customers behave—what
they search for, how they make decisions, and what factors influence repeat
usage. Example: A mobile app-based taxi service might analyze app usage
data to find out peak hours of booking or why users abandon rides midway.
6. Understanding Service Gaps: Marketing research helps identify gaps
between customer expectations and actual service performance. These gaps,
if not addressed, lead to dissatisfaction and loss of business. Example: A
spa might discover through secret shopper research that while their
advertising promises “luxury,” customers feel the facilities are outdated.
7. Testing New Service Concepts: Before launching a new service,
businesses can use research to test concepts with target customers. This
ensures the offering is aligned with customer needs and reduces the risk of
failure. Example: An airline might test customer interest in a new “silent
cabin” option by conducting surveys or running a pilot program.
8. Monitoring Trends and Expectations Over Time: Customer
preferences and market conditions change. Continuous marketing research
helps businesses stay updated and adjust their services accordingly.
Example: A gym may observe through recurring surveys that customers
now prioritize wellness and mental health programs more than intense
physical training.
9. Analyzing Service Failures: When service delivery goes wrong,
marketing research helps uncover why the failure happened and how it can
be prevented. This includes studying customer complaints, refund requests,
or online reviews. Example: A bank might analyze customer complaints to
find that delays in customer support response are causing major
dissatisfaction.
10. Enhancing Customer Retention and Loyalty: Understanding what
keeps customers coming back is vital. Research reveals the drivers of

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customer loyalty—whether it’s pricing, convenience, trust, or emotional

connection. Example: A streaming service could discover through research
that original content and ad-free viewing are the top factors influencing user
loyalty.

Scope of Marketing Research in Services

Marketing research covers a wide range of subject from people issues to
marketing processes and the services environment. Some of them are:
1. Research of Services Environment like the Political and Socio-
economic Factors: The studies of the services environment factors
would include the political, economic, socio-cultural, legal and
technological, etc. This analysis would give the service manager a guiding
template for doing business. They are those factors that no service
manager can ever control or influence. He or his service firm has to adapt
to these environmental factors and deliver their service within their
framework.
2. Research into Customer Needs: This will help the service marketer to
know his different needs, especially his latent needs, and develop new
service products. Gujarat based Lalbhais who are into textiles (Arvind
denim) would have made an attempt to find out the latent needs of the
urban and upwardly mobile Indian parents for a high-quality pre-school
institution, before venturing into Eurokids, their successful education
franchise.
3. Research into Customer Expectations: Expectations make a customer
perceive the received offer in a judgmental mode. This is due to the
intangibility factor of the service offer. Variance between the expected
offer and the service receipt will generate problems, dissatisfaction, etc.
This particular research would enable service providers like Sahara Air to
know customer expectations and attempt to provide those services,
bridging the quality gap.

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4. Customer Perception Studies: Quality in service is as perceived by the

customers. Thus, perception studies can be undertaken before or after the
experience or consumption of the service offer. This is the only way for a
market-driven service firm to measure the quality of its offer.
5. Benchmarking Studies: If a service firm is desirous of the highest of
quality and adopting the best of practices then it does not restrict itself in
studying or comparing companies in its own industries. It tries to learn by
researching about the operating methods of unrelated areas and
replicating them in their own organisation.
6. Service Distribution Studies: The marketing research would entail
studying the effectiveness of all possible type of distribution system - for
example, direct versus franchising versus the usual wholesaler-retailer-
dealer network. The intermediaries like dealers, retailers, agents, etc.,
7. Pricing Research: This research is done on the different pricing methods
that a service marketer has options of adopting. The research tries to help
the service marketer to fit the appropriate method to the objective of the
organisation.
8. Promotion Research: Promotions are the broad communication tools at
the disposal of the service marketer to reach out to the customers. They
include advertising, public relations, sales promotions and personal
selling. Each has their respective strengths, weaknesses and
effectiveness.
9. Communication Research: Although this research comes under
Promotion research, it is comprehensive enough to merit separate
nomenclature. This consists of mostly advertising research (sample
respondent s reactions to various pilot advertisements), media research,
panel survey, etc.
10. Key Client Analysis: A Pareto or an ABC Analysis of a service firm s
customers would reveal that 80% of them contribute only 20% of its
revenues or profits; 80% of the revenues or profits are generated, most of
the time, by only 20% of its customers. This would make it imperative for

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the service firm to give differential treatment to those customers who are
key important to its profitability and direct exclusive service for them.
Without such research, a service firm may be unaware of important and
key clients.
Customer
In service marketing, the customer is the central focus of all business
activities. Unlike product-based industries, where the value lies in tangible
goods, the value in services lies in the experience, interaction, and
satisfaction derived during service delivery. Because services are intangible,
perishable, and often produced and consumed simultaneously, the customer
plays an active role in the service process—not just as a receiver but often as
a co-creator of value.
In service marketing, the customer is not just a recipient of service but an
integral part of the service ecosystem. Understanding who the customer is,
how they think, what they expect, and how they judge service quality is
essential for any organization offering services.
“A customer is the actual or prospective purchaser of products or services
offered by a business.” __ American Marketing Association
(AMA)

“Customers are individuals who participate in service encounters, influence

outcomes, and evaluate the service experience.” ____ Zeithaml & Bitner
Types of customers
1. Loyal Customers: Loyal customers are those who repeatedly use a
service over an extended period. They have built a strong relationship with
the service provider and tend to prefer it over competitors. Their continued
patronage is often due to satisfaction with the service quality, trust in the
brand, or emotional attachment. These customers can become advocates for
the business, promoting it through word-of-mouth and personal
recommendations. Example: A customer who has been visiting the same

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hair salon for years, always booking with the same stylist, and
recommending the place to friends and family.
2. Impulse Customers: Impulse customers make spontaneous decisions to
use services without prior planning. Their actions are usually triggered by a
specific situation, advertisement, or an emotional urge. These customers are
often seen in sectors like hospitality, entertainment, or retail services, where
immediate gratification or convenience plays a key role in decision-making.
Example: A traveler who walks by a spa while on vacation and decides to
book a massage session without any prior intention or research.
3. Discount Customers: Discount customers are primarily motivated by
deals, offers, or lower prices. They actively look for services that provide cost
savings or promotional benefits. This type of customer is common in
competitive markets where pricing plays a significant role in attracting
attention. Their focus is on value for money rather than brand or long-term
commitment. Example: A person who books a hotel through a discount site
like Booking.com or Expedia, choosing whichever hotel is offering the biggest
discount, regardless of the hotel chain.
4. Need-Based Customers: These customers seek out services only when
they have a specific requirement or problem to solve. They don’t regularly
engage with the brand but become customers temporarily when the need
arises. For instance, a person might only visit a car service center when the
vehicle breaks down or only book a hotel when traveling for an event.
Example: A person who calls a plumber only when there’s a leak or drainage
issue at home, with no ongoing relationship or frequent use of plumbing
services.
5. New Customers: New customers are individuals who are using a service
for the first time. They may have learned about the service through
advertising, referrals, or online research. This type of customer is in the
discovery phase and is evaluating whether the service meets their
expectations. Their first impression plays a crucial role in determining
whether they return. Example: A family who books a table at a new

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restaurant they’ve never tried before after seeing it mentioned in a local food
blog.
6. Potential Customers: Potential customers, also known as prospects, are
individuals or organizations that have shown interest in the service but have
not yet made a purchase or booking. They might have visited the website,
contacted customer service, or interacted with marketing content. These
customers represent future business opportunities. Example: Someone who
fills out a form for a gym trial membership, browses the class schedule
online, and speaks to the staff but hasn’t signed up yet.
7. Dissatisfied Customers: Dissatisfied customers are those who have had
a negative experience with the service and feel that it did not meet their
expectations. Their dissatisfaction may arise from service delays, poor staff
behavior, unmet promises, or quality issues. These customers may voice
their concerns through complaints or negative reviews, and they may also
stop using the service. Example: A guest who stayed at a hotel and left a
negative review online after encountering poor room service and unclean
facilities during their stay.
8. Passive Customers: Passive customers are those who continue to use a
service but show low engagement or emotional involvement. They may not
actively complain or praise the service but also do not demonstrate
enthusiasm or brand loyalty. These customers often stay because of
convenience or lack of better alternatives, rather than genuine satisfaction.
Example: A person who continues to use the same mobile phone service
provider for years without exploring alternatives, even though they don’t
particularly love the service.
9. Demanding Customers: Demanding customers have high standards
and expect exceptional service. They often require more attention, detailed
information, or personalized treatment. These customers may push the
service provider to deliver beyond standard expectations and can be vocal
about what they want or what went wrong. Example: A frequent flyer who

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insists on seat upgrades, customized meals, and fast-track boarding every

time they fly with a premium airline.

10. Influencer Customers: Influencer customers are individuals whose

opinions significantly impact others' choices. They might be social media
figures, bloggers, or simply respected voices within a community. Their
usage of a service and public commentary on it can shape the perceptions
and behavior of a larger audience, making them powerful agents in brand
promotion. Example: A popular food blogger who visits a new cafe and
shares their experience with thousands of followers on Instagram, impacting
the cafe’s visibility and reputation.

Customer Relationship Management

Customer Relationship Management (CRM) in services marketing refers to
the strategic process of managing a company’s interactions with current and
potential customers to build strong, long-term relationships. Since services
are intangible, variable, and often involve direct customer interaction, CRM
plays a vital role in ensuring consistent service quality, personalized
experiences, and customer satisfaction.
In the service sector—such as hospitality, healthcare, education, and banking
—CRM helps businesses understand customer needs, track preferences,
respond to feedback, and foster loyalty. It integrates customer data,
communication channels, and service processes to create meaningful
engagements that enhance customer retention and overall business
performance.

“CRM is a business strategy that focuses on understanding, anticipating, and

responding to the needs of an organization’s current and potential customers
to grow relationships and increase customer lifetime value.”

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“CRM is the process of carefully managing detailed information about

individual customers and all customer ‘touch points’ to maximize customer
loyalty.” _ Philip Kotler
Example: Reliance Jio, a major telecommunications provider in India, uses
CRM to efficiently manage its large and diverse customer base. The CRM
system helps Jio:
 Personalize Services: By analyzing customer data, Jio can tailor its
service offerings, promotions and plans to individual preferences and
usage patterns. For example, it might offer customized data packages
based on a customer’s past usage.
 Respond Quickly: CRM tools help Jio track and resolve customer
inquiries and issues promptly. Automated workflows and
communication channels ensure that customers receive timely
support, enhancing their overall experience.
Process of CRM:
1) Data Collection: The first step in the CRM process involves gathering
comprehensive information about customers, including their contact details
(name, phone number, email address), purchase history (items bought,
dates, amounts), preferences (product likes, communication preferences)
and interactions with the company (customer service inquiries, feedback).
For example, Flipkart collects data from its customers through its e-
commerce platform, including browsing behavior, purchase history and
reviews. This data helps create detailed customer profiles, which supports
personalized service and targeted marketing.
2) Data Storage: Once data is collected, it is stored in a centralized CRM
system, which organizes and secures the data, ensuring it is easily
accessible and manageable for authorized users. Flipkart uses a
sophisticated CRM system to store customer profiles, including purchase
history and preferences, in a centralized database. This centralized storage
facilitates efficient management and retrieval of data, eliminating the need
for disparate systems and reducing the risk of data loss.

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3) Data Analysis: After storing the data, the next step is to analyze it to
gain insights into customer behaviour, trends and needs. This involves
examining patterns in purchasing, identifying customer preferences and
reviewing feedback. Flipkart analyzes data to identify shopping trends, such
as popular products and peak buying times, which helps the company
understand customer behaviour and make informed decisions to enhance
engagement and service.
4) Customer Segmentation: Customers are divided into distinct segments
based on shared characteristics or behaviours, such as demographics (age,
gender, location), purchasing habits (frequency of purchases, product
categories), or engagement levels (active vs. inactive customers). Flipkart
segments its customers into groups such as frequent shoppers, seasonal
buyers and first-time customers. This segmentation allows for more targeted
marketing and communication, tailoring offers and messages to each group’s
specific needs and preferences.
5) Personalized Engagement: Using insights from data analysis and
segmentation, businesses create personalized interactions with customers,
including customized offers, tailored product recommendations and
personalized communications. Flipkart uses this information to send
personalized email campaigns with special offers on products that customers
frequently buy or have shown interest in, increasing the relevance of
interactions and improving customer satisfaction.
6) Automation of Tasks: Routine tasks are automated using CRM tools,
including sending follow-up emails, scheduling appointments, managing
leads and handling other repetitive tasks. Flipkart automates notifications
about order status, promotions and abandoned cart reminders. This
automation streamlines operations, reduces manual effort and ensures
timely communication, allowing staff to focus on more strategic activities.
7) Customer Interaction Management: All customer interactions,
including inquiries, support requests and feedback, are managed and tracked
through the CRM system. Flipkart tracks all customer service interactions,

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ensuring that inquiries are addressed promptly and issues are resolved
efficiently. This comprehensive management helps maintain high levels of
customer satisfaction and provides consistent service.
8) Performance Monitoring: The effectiveness of CRM activities and
campaigns is monitored using metrics and reports, tracking key performance
indicators (KPIs) such as customer satisfaction scores, conversion rates and
campaign success. Flipkart reviews CRM performance reports to evaluate the
success of its marketing campaigns, customer service efforts and overall
CRM strategy, making necessary adjustments to improve results.
9) Continuous Improvement: Feedback and performance data are used to
refine CRM strategies and processes, involving making adjustments based on
what has been successful and addressing any issues or gaps identified.
Flipkart continuously updates its CRM practices based on customer feedback
and performance metrics, adapting its strategies to better meet customer
needs and improve overall effectiveness.

Strategies to Build Customer Relationships An organization’s strategies

towards developing and maintaining sustainable relationship differ from one
organization to another depending on certain factors. These include nature of
business, its size, its market share, nature of product type, volume of sales,
geographic concentration, socio-economic status and life style of the
customers concerned, competitors’ strength, and so on. The following
sections provide a wide spectrum of strategies that are practiced by service
organizations with national and global perspectives.
1. People: People within the organization have the basic role in developing
and maintaining relationship with customers. Everyone in the organization
must realize the fact that they are working towards satisfying customers.
Everyone from the lowest to the highest level irrespective of their
functional specialization and responsibilities must integrate their activities
towards one of the main objectives of a service organization—customer
satisfaction.

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2. Process: Process involves a logical sequence of activities right from the

need identification of potential customers to their need fulfilment. Need
fulfilment requires delivery of services with desired attributes. The
process has to be derived from the customer’s viewpoint, which paves
way for total customer satisfaction. The performance of each service
encounter must be objectively analysed and corrected in tune with the
internal and external customers’ expectations.
3. Product: The service offered must constantly provide value addition. The
expectations of the customers may always be on the increase due to
various reasons. A customer satisfied with a given product may soon
become an unsatisfied customer in view of the changes that take place in
his or her own expectations. In the absence of physical evidence, it is hard
to keep track of customer’s expectations and its realization.
4. Organization: In order to build customer relationship, a service
organization should be aware of the technology advancements and
provide quality services in tune with the customer’s expectations. It
should concentrate on total customer satisfaction and respond to the
requirements of the customers faster than its competitors. The responsive
and learning nature of a service organization must build confidence in the
mind of the customers that will go a long way in building the customer
relationship.
5. Concentration on Competitors: An organization must focus constant
attention on the competitors’ performance, their strategy and style of
operations and compare the same with its own performance. Customers
always make this comparison, especially during the pre-sales phase, and
decide their future purchase pattern. Such analysis done by organization
would help in increasing its strengths and reducing its weaknesses.
6. Cost Analysis: An organization must focus attention on the cost of the
services. There must always be sincere attempts towards cost reduction
without compromising on quality. The organization must perform value
analysis and try to reduce costs and retain the same good quality or

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improve quality of the service. This would help to avoid switching over of
the customer to other service-providing firms.
7. Knowledge on Purchase Behaviour Pattern: Organizations should
have a thorough knowledge of the purchase behaviour pattern of their
customers. The influencing factors of the purchaser decision process and
the ultimate outcome are to be analysed in depth. The outcome of
purchase decision may be any one of the four, viz., (1) purchase, (2)
rejection, (3) postponement, (4) search for substitutes. The organization
should have an idea about what percentage of customers arrive at what
sort of a decision and appropriate steps are to be initiated towards
making them buy the services on a continued basis.
8. Training Supply Chain Employees: In case of organizations that
involve a supply chain for the delivery of the services, it must provide a
state-of-the-art training to all those who are connected in the supply
chain. Every link in the supply chain is very important. Unsatisfactory
performance by anyone will jeopardize the entire process of providing
total satisfaction to the customers concerned. Training in the areas of
customer care, customer approach, body language of service providers,
customer communication, customer need assessment, customers
complaint management, etc. are to be provided.
9. Relationship-Based Pricing Schemes: Introduction of relationship-
based differential pricing scheme would encourage customers towards
relationship building. Under this method, the prices charged from
customers are dependent on their extent of loyalty. A customer, who
makes frequent visits to a particular hotel, will be charged less as
compared to the other category of buyers. Several hotels, airlines,
hospitals, etc. practice this method of pricing.
10. Identifying with Social Events and Concern for Societal
Problems: An organization must come forward to identify itself with all
social events with which the organizations and the customers are

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concerned. It may mean celebrating religious functions, national days,

organizing or sponsoring sports meets, and cultural meets.
11. Customer Complaint Monitoring Cell: In service process, there is
always scope for service failure. In such a case, attending to the
grievances is the first step towards service recovery. An organization
should focus attention on establishing an efficient customer complaint
monitoring cell. The role of the cell is to receive, register, and classify
complaints, forward them to the respective departments to initiate action,
and follow-up until the complaint is attended to the satisfaction of the
customer concerned.
12. Effective Customer Communication System: Organizations must
have simple, open, efficient customer friendly communication. The
customer must feel free to contact the organization at any point of time
and get any sort of their problem solved. Special training may be given to
personnel working in the communication channel specially in being
receptive, encouraging, positive, optimistic and friendly to customers.
Each communication received should be recorded, classified and analysed
as to their nature, and significance.

Benefits of CRM
1. Enhanced Customer Retention: CRM systems help service businesses
track and manage customer interactions throughout their lifecycle. By
analyzing customer behavior and preferences, businesses can proactively
address concerns, offer personalized services, and build loyalty—leading to
increased retention rates. Example:
A telecom company like Vodafone uses CRM to track data usage and
payment history. When a customer's usage drops or they miss a payment,
the system alerts the retention team to offer discounts or custom plans to
retain the customer.
2. Improved Customer Satisfaction: With CRM, service providers have
access to detailed customer profiles, including past interactions and

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preferences. This enables them to provide faster, more personalized support,

which enhances the overall customer experience and satisfaction. Example:
Marriott Hotels uses CRM to remember guest preferences—like room type,
pillow choice, or dietary needs. On repeat visits, these preferences are
automatically accommodated, boosting guest satisfaction.
3. Better Targeted Marketing Campaigns: CRM tools segment customers
based on various criteria such as demographics, purchase history, and
service usage patterns. This segmentation allows marketers to design and
execute more relevant and targeted marketing campaigns, resulting in
higher engagement and conversion rates. Example:
Netflix uses CRM data to segment users by watch history and preferences.
They send personalized emails suggesting shows based on previous viewing
behavior, increasing engagement and retention.
4. Streamlined Communication: CRM centralizes all communication
channels, including emails, social media, and phone interactions. This unified
communication approach ensures consistent messaging, reduces response
times, and helps in maintaining a coherent brand voice. Example: HDFC
Bank CRM integrates SMS, email, and call records. If a customer calls
support, the agent can see recent email communications, ensuring a smooth,
informed conversation.
5. Efficient Service Delivery: For service-oriented businesses, timely and
effective service delivery is crucial. CRM systems automate task
assignments, scheduling, and follow-ups, which streamlines operations and
reduces service delays or errors. Example: UrbanClap (now Urban
Company) uses CRM to allocate service professionals based on location and
availability. This minimizes delays and improves customer experience.
6. Data-Driven Decision Making: CRM platforms generate valuable
insights through analytics and reporting features. Service marketers can
leverage these insights to identify trends, monitor campaign effectiveness,
and make informed strategic decisions to enhance customer engagement
and profitability. Example: A salon chain like Naturals uses CRM analytics to

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identify which services are most booked and by whom, enabling them to
introduce combo packages or seasonal offers targeted at specific customer
segments.
7. Personalized Customer Experiences: CRM enables service providers
to tailor their offerings to meet individual customer needs. By using data like
purchase history and preferences, businesses can suggest relevant services,
offer customized deals, and enhance customer satisfaction and loyalty.
Example: Amazon (though more product-based, applies service CRM too)
sends personalized birthday discounts or recommends products based on a
user’s search and purchase history.
8. Increased Cross-Selling and Up-Selling Opportunities: By
understanding customer needs and purchase patterns, CRM helps identify
opportunities for cross-selling (offering related services) and up-selling
(offering premium versions). This not only boosts revenue but also adds
value to the customer. Example: ICICI Bank uses CRM to recommend
personal loans or credit cards to existing savings account holders based on
their income and transaction data, increasing cross-sell conversions.
9. Improved Customer Feedback and Issue Resolution: CRM systems
often include tools for gathering and managing customer feedback. This
allows businesses to promptly address issues, resolve complaints efficiently,
and improve services based on real-time customer input. Example: Zomato
uses CRM tools to collect feedback after each food delivery. Complaints are
logged and addressed immediately, with the system escalating unresolved
issues to a supervisor.
10. Stronger Customer Loyalty and Advocacy: Through consistent
engagement and personalized service, CRM fosters strong emotional
connections with customers. Satisfied customers are more likely to become
loyal brand advocates who promote the service through word-of-mouth,
reviews, and referrals. Example: Starbucks uses its CRM-powered loyalty
app to reward frequent customers with points, exclusive offers, and early

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access to new items, encouraging repeat visits and word-of-mouth

promotion.

Challenges in Customer Relationship Management

1. Data Collection and Integration: Gathering accurate, comprehensive
customer data from multiple sources (emails, chats, service visits, social
media, etc.) is complex. Inconsistent or siloed data leads to poor customer
insights and ineffective strategies. Service industries often involve real-time
and multi-channel interactions, making it difficult to centralize and
standardize customer data effectively.
2. Personalization at Scale: While personalization is key to strong
customer relationships, doing it effectively for thousands or millions of
customers is difficult without sophisticated tools and segmentation.
Customers expect personal attention in service-based businesses (e.g.,
hotels, banks). Failing to deliver relevant messages or offers can result in
poor experiences.
3. Maintaining Human Touch in Digital Channels: As CRM becomes
increasingly automated through chatbots and email workflows, maintaining
an emotional and human connection is more challenging. Many service
sectors (like healthcare or hospitality) require empathy and trust, which are
hard to replicate through automation alone.
4. Customer Expectations and Experience Consistency: Today's
customers expect seamless, personalized experiences across every
touchpoint—online, mobile, in-person. Service delivery varies based on
employees and situations. Inconsistencies across branches, platforms, or
staff interactions can damage the customer relationship.
5. Employee Engagement and Training: Employees play a key role in
CRM success. Poorly trained staff may fail to use CRM tools effectively or
deliver consistent service. Frontline service employees are the face of the
brand. If they don’t understand or align with CRM goals, customer loyalty
suffers.

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6. CRM System Adoption and Complexity: Implementing a CRM system

often requires significant investment and training. Poor user adoption or
complex interfaces reduce system effectiveness. Service-based teams may
resist CRM tools if they feel it slows them down or doesn’t directly contribute
to their customer-facing role.
7. Privacy and Data Security Concerns: Customers are increasingly
concerned about how their data is used and stored. Poor data practices can
lead to trust issues or legal risks. In industries like finance or healthcare, any
mishandling of personal data can severely damage customer trust and brand
reputation.
8. Measuring CRM Success: Quantifying the impact of CRM initiatives on
customer satisfaction, loyalty, and revenue is not straightforward. Services
are intangible and rely heavily on customer perception, making it harder to
measure ROI from CRM strategies accurately.
9. Customer Retention in Competitive Markets: Retaining customers is
increasingly difficult with many options available and low switching costs.
Service businesses must continuously prove value, maintain quality, and
nurture relationships to prevent churn.
10. Aligning CRM with Business Objectives: CRM efforts must be tied to
broader business goals such as customer satisfaction, profitability, or growth.
Without alignment, CRM activities may become disconnected from core
business strategies, reducing their impact.

Customer Relationship Marketing

Customer Relationship Marketing is a long-term marketing strategy that
focuses on building strong, emotional connections with customers to
encourage loyalty, repeat business, and brand advocacy. Instead of focusing
on one-time sales, it emphasizes personalized communication, customer
satisfaction, and value-driven engagement. The goal is to turn first-time
buyers into loyal customers and loyal customers into brand ambassadors by

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understanding their needs and consistently meeting or exceeding

expectations.

According to Philip Kotler "Customer relationship marketing is the process of

creating, maintaining, and enhancing strong, value-laden relationships with
customers and other stakeholders."
"Customer relationship marketing refers to marketing activities that are
aimed at developing and managing long-term relationships with customers,
rather than focusing solely on individual transactions." ___ American
Marketing Association (AMA)

Difference between transactional and relationship marketing

Transactional Marketing: Transactional Marketing focuses on single sales
and short-term goals. The objective is to maximize individual transactions,
emphasizing product features, price, and quick conversions. This approach
treats each customer interaction as a one-time event, with minimal emphasis
on follow-up or long-term engagement.
Relationship Marketing: Relationship Marketing emphasizes long-term
customer engagement and loyalty. It aims to build meaningful, ongoing
relationships with customers by understanding their needs, preferences, and
behaviors. This strategy focuses on customer satisfaction, trust, and repeat
business over time.

Aspect Transactional Marketing Relationship Marketing

1. Focus Focuses on achieving a Focuses on building a long-term,
single sale or transaction. ongoing relationship with the
customer to increase lifetime
value.
2. Time Short-term. Once the sale Long-term. Continuously engages
Orientation is complete, the interaction the customer after the sale to
ends. ensure repeat business.

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3. Customer Minimal and transactional. Continuous and personalized

Interaction Interaction is limited to the interaction throughout the
point of sale. customer lifecycle.
4. Primary Maximize individual sales Build customer loyalty, retention,
Objective volume and efficiency. and satisfaction.
5. Strategy Product-oriented. Customer-oriented. Emphasizes
Type Emphasizes features, price, needs, preferences, and
and quality. personalized service.
6. Marketing Uses mass marketing Uses targeted marketing based
Approach techniques (ads, on customer data (CRM, email
promotions). campaigns, loyalty programs).
7. View of Seen as a means to Seen as a valuable asset whose
Customer generate revenue for a satisfaction ensures future
single transaction. business and advocacy.
8. One-way communication Two-way communication;
Communication from business to customer. customers are encouraged to give
Style feedback and engage.
9. Performance Measured by number of Measured by customer lifetime
Metrics sales, revenue, and value, satisfaction, and retention
transaction speed. rate.
10. Use of Often limited to sales or Heavy use of CRM systems, data
Technology billing tools. analytics, and AI to track
behaviour and preferences.

Differences Between CRM and Customer Relationship Marketing

Customer Relationship Management (CRM): CRM is a technology-driven
system or strategy used to manage a company’s interactions with current
and potential customers. It involves using software, data, and tools to store
customer information, track interactions, and optimize sales, marketing, and
service efforts.
Customer Relationship Marketing: Customer Relationship Marketing is a
marketing strategy focused on building and nurturing long-term relationships
with customers. It emphasizes personalized communication, loyalty
programs, and value delivery to retain customers and encourage repeat
business.

Aspect Customer Relationship Customer Relationship

Management (CRM) Marketing (CRMarketing)

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1. Nature System or tool for Marketing strategy focused

managing customer on customer engagement
interactions and loyalty
2. Primary Operational efficiency and Emotional connection and
Focus data management personalized marketing
3. Function Stores and analyzes Uses insights to build
customer data to campaigns that nurture
streamline business relationships
processes
4. Role in Backend support tool for Front-end approach to create
Business sales, service, and and maintain customer
marketing loyalty
5. Technology Highly reliant on software May use CRM tools but
Involvement and automation (e.g., focuses more on content,
Salesforce, HubSpot) offers, and interaction
6. User Sales reps, support agents, Marketers, brand managers,
marketing analysts customer engagement
teams
7. Goal Improve customer service, Foster trust, loyalty, and
sales pipeline, and data repeat purchases
accuracy
8. Data Usage Collects and analyzes Uses customer insights to
customer behavior and shape personalized
history marketing messages
9. Interaction Transactional and Emotional and relationship-
Type operational driven
10. Examples Logging support tickets, Sending loyalty offers,
tracking sales funnels, creating customer retention
monitoring KPIs programs

Need for Customer Relationship Marketing

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Customer Relationship Marketing(CRM) is one among the themes with which

business firms have to arm themselves to succeed in a competitive
marketplace. Focusing on personalized interactions and understanding the
needs and requirements of the customers, CRM is developing satisfaction,
and also fosters strong loyalty.
1. Customer Loyalty Enhancement: One of the most basic need
advocates of CRM is the ability of customer loyalty through unique
experiences catered to specific tastes and needs. Loyalty consumers
readily allow follow-through and act as ambassadors that effectively
market the brand, thus leading to long-term business growth. Effective
CRM strategies enable businesses to meet and exceed customer
expectations and foster relationships that last longer.
2. Customer Retention: It also boosts customer retention through tools
and strategies that help keep customers interested and satisfied.
Retaining already existing customers is often economical compared with
finding new ones. CRM helps to track customer interactions, so their
issues are dealt with promptly. Consistent and positive interactions reduce
churn and increase the value of lifetime customers.
3. Personalize Marketing Efforts: Another stringent business requirement
for CRM is the facilitation of personalized marketing activities through
utilization of comprehensive customer data and information.
Personalization allows for messages and offers relevance to every single
customer, thereby maximizing effectiveness in marketing. This aspect
raises customer interaction and conversion.
4. Customer Interaction Optimization: CRM systems are necessary in
optimizing interactions with customers by giving a holistic overview of
each customer's past and preferences. This will be able to integrate
communication with their customers and ensure that all touched points
reflect consistency and relevance. Therefore, effective customer
interaction management leads to enhanced customer satisfaction and
tighter customer experience.

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5. Driving Business Growth: CRM is a growth catalyzer for businesses:

hence energizing the use of customer insight to recognize new
opportunities and even the ways to optimize sales strategies. Businesses
thus discover all trends by accessing data from customers' activities and
making forecasts regarding what they would want, and shape their
approaches according to the needs of the market immediately. Strategic
usage of CRM tools plays a role in informed decision-making, business
performance, etc.

Customer Relationship Marketing strategies

1. Personalized Communication: Tailoring messages, offers, and content
to individual customer preferences, behavior, and history helps make
interactions more relevant and engaging. This fosters a sense of recognition
and value, increasing customer loyalty. Example: Amazon recommends
products based on past purchases and browsing history, making emails and
homepages feel customized for each user.
2. Loyalty Programs: Developing reward systems that recognize and
incentivize repeat purchases or long-term engagement encourages
customers to return. Loyalty programs enhance retention by offering value
beyond the product or service. Example: Starbucks Rewards gives
customers stars for each purchase, which can be redeemed for free drinks or
food, keeping them coming back.
3. Customer Segmentation: Dividing the customer base into meaningful
groups based on demographics, behaviors, or value enables more targeted
marketing. This allows businesses to customize strategies for each segment,
improving overall effectiveness. Example: Spotify segments users by
listening habits and sends them personalized playlists and end-of-year
summaries, increasing engagement.
4. Consistent Multi-Channel Engagement: Ensuring a consistent brand
experience across multiple channels—such as email, social media, in-store,
and customer support—builds trust and convenience. It allows customers to

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engage with the brand on their preferred platform. Example: Nike integrates
its app, website, and stores so users can get updates, exclusive offers, and
track fitness goals no matter the channel.
5. Proactive Customer Service: Anticipating customer needs and
resolving issues before they escalate shows commitment and care. Proactive
service includes sending helpful information, updates, or checking in with
customers at key points in their journey. Example: Apple often reaches out
to customers after a service appointment to ensure satisfaction and provide
further assistance if needed.
6. Feedback Collection and Utilization: Regularly collecting customer
feedback through surveys, reviews, or direct interactions helps businesses
understand customer expectations and improve. Acting on feedback
demonstrates responsiveness and a customer-first approach. Example:
Zomato sends feedback forms after each food delivery and uses that
information to improve restaurant listings and delivery service.
7. Emotional Connection Building: Creating marketing messages and
experiences that resonate emotionally with customers enhances brand
affinity. This strategy focuses on storytelling, shared values, and meaningful
interactions to deepen relationships. Example: Dove’s “Real Beauty”
campaign showcases real women and promotes self-confidence, creating a
bond based on values rather than products.
8. Value-Added Content Marketing: Providing useful, informative, or
entertaining content tailored to customer interests helps establish authority
and trust. It positions the brand as a partner rather than just a seller,
supporting long-term engagement. Example: Red Bull produces extreme
sports videos and lifestyle content that align with its adventurous brand
image, keeping audiences engaged.
9. Customer Journey Mapping: Understanding and optimizing every stage
of the customer journey ensures a seamless and satisfying experience.
Mapping the journey helps identify key touchpoints where relationship-
building efforts can be most impactful. Example: Marriott Hotels maps out

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every guest touchpoint—from booking to checkout—to ensure personalized

service and collect preferences for future visits.
10. Retention and Win-Back Campaigns: Strategically focusing on
retaining existing customers and re-engaging lapsed ones is more cost-
effective than acquiring new ones. These campaigns use targeted messages
and incentives to renew interest and commitment. Example: Netflix sends
personalized emails to former subscribers with new shows they might like
and offers a free trial to win them back.

Unit-4: Marketing Communication:

Meaning and definition of marketing communication ,importance, objectives
of marketing communication , role of marketing communication , product
delivery.
Marketing communication
The firm’s promotion, or communications strategy, informs, persuades, and
reminds target markets, including consumers, employees, and stockholders
about the firm’s goods and services for the purpose of achieving
organizational objectives.
Communication is an effective tool to build up relationship between the
customers and an organization with the help of various marketing channels.
It holds together the channel distribution of products and services. Creating
and maintaining effective communication is the need of the hour for
addressing the intensity of competition of services. Marketing
communications can be defined as the science and art of communicating in
sequence that the company wants to reveal to the public.

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“Marketing communication represents the voice of the company and its

brands. It is how companies inform, persuade, and remind consumers—
directly or indirectly—about the services they sell.” ____ Kotler & Keller
According to Lovelock & Wirtz “Marketing communication in service
marketing is the planned use of communication channels to manage
customer expectations, enhance perceived value, and establish trust in a
service provider.”
Importance of Marketing Communication
Marketing communication in service marketing is not just about promotion —
it’s about education, relationship-building, expectation management, and
trust-building. In a world where services dominate many industries, strong,
clear, and emotionally resonant communication becomes a strategic
necessity.
1. Creates Awareness of the Service: Since services are intangible and
often complex, customers need to be informed about their existence and
benefits. Marketing communication makes potential customers aware of
what the service is, who provides it, and how it can solve their problems.
Example: Zomato uses app notifications, social media, and digital ads to
make users aware of new restaurant partners and delivery offers.
2. Builds Trust and Reduces Perceived Risk: Services cannot be
touched, tested, or returned like physical goods, so customers often feel
uncertain before purchase. Clear, honest, and consistent communication
helps build credibility and trust, reducing fear of the unknown. Trust is
particularly important in industries like healthcare, finance, or legal services,
where risks and costs are high. Example: Policybazaar, an insurance
aggregator, uses video explanations and customer testimonials to build trust
in their digital insurance services.

3. Helps Differentiate in a Competitive Market: Many services are

similar in function. Marketing communication highlights the unique value
proposition or distinct features that differentiate a service from competitors

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(e.g., faster delivery, better support, more personalized experience).

Effective branding and messaging help build a strong, recognizable identity
for the service. Example: Axis Bank promotes its 24/7 virtual banking
assistant and personalized customer support to differentiate from other
banks.
4. Educates Customers: Service customers often do not fully understand
what they’re buying or how it works. Marketing communication provides
essential educational content, such as how-to guides, FAQs, demonstrations,
and case studies. This enhances confidence and empowers customers to
make informed decisions. Example: Coursera uses emails and content
marketing to educate users on course benefits, skill outcomes, and how to
enroll.
5. Manages Customer Expectations: Disappointment often arises from a
gap between promised and delivered service. Clear communication helps set
realistic expectations about what the service includes, what it doesn't, how
long it takes, and what outcomes can be expected. Managing expectations
leads to higher satisfaction and fewer complaints. Example: Uber shows
estimated arrival times and fare ranges before a ride, which prepares
customers for the experience and reduces complaints.
6. Supports the Service Encounter: Marketing communication does not
stop after the sale. It supports the entire customer journey, including service
delivery. Internal communication, signage, mobile apps, and follow-up emails
all contribute to a smooth and consistent experience. It enhances the service
encounter by making the process intuitive and customer-friendly. Example:
Swiggy sends live delivery updates via app notifications and emails,
improving customer experience and reducing uncertainty.
7. Enhances Customer Loyalty and Retention: Ongoing communication
after the initial service builds a long-term relationship with the customer.
Loyalty programs, newsletters, birthday greetings, and feedback requests
help maintain engagement and encourage repeat business. Loyal customers
are more likely to refer others, reducing marketing costs. Example: Taj

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Hotels regularly engages loyal customers with exclusive stay offers and
invites to events, encouraging repeat stays.
8. Drives Word-of-Mouth and Brand Advocacy: Satisfied customers who
receive good communication are more likely to share their positive
experiences with others. Word-of-mouth is a powerful and cost-effective form
of promotion, especially in services where trust is key. Examples include
reviews, testimonials, and referrals, which often stem from effective
communication. Example: Dropbox grew rapidly by offering extra storage
space to users who referred their friends, communicated through clear
referral messages.
9. Builds Emotional Connection with the Brand: Services are often
about experiences and feelings, not just functionality. Storytelling, visuals,
and tone of voice in communication can create an emotional bond between
the customer and the brand. Emotional marketing fosters brand loyalty and
differentiation. Example: Airbnb uses storytelling in ads and user-generated
content to emotionally connect with customers and position itself as a brand
of meaningful travel.
10. Supports Internal Marketing: In service marketing, employees are a
key part of the brand experience. Internal communication ensures that
employees understand the brand values, customer expectations, and their
role in delivering the service. Well-informed staff provide consistent and
aligned service, reinforcing the external message. Example: Marriott Hotels
trains its employees using internal videos and manuals to ensure service
standards align with their brand image.
Objectives of Marketing Communication
Marketing communication objectives are explained in detail:
1. To Increase Awareness: One of the primary goals is to make potential
customers aware of the service offering, especially since services are
intangible and cannot be seen or touched before consumption. When you
initially enter the market, you have to let people know your company and
products or services exist. This might include broadcast commercials or

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print ads that depict the image of your company and constant repetition
of your brand name, slogans and jingles. The whole objective is to
become known and memorable.
2. To Educate Customers About the Service: Many services involve
complex or abstract elements that customers may not understand fully.
Marketing communication helps educate customers on:
 How the service works
 What benefits it offers
 How to use it effectively
 Any terms, conditions, or procedures involved
Educational content reduces confusion and enhances the customer’s
ability to make informed decisions.
3. To Change Attitudes: Changing company or brand perceptions is
another common communication objective. Sometimes, misconceptions
develop in the market about your company, products or services.
Advertising is a way to address them directly. In other cases, negative
publicity results because your company is involved in a business scandal
or unsettling activities.
4. To Build Trust and Reduce Perceived Risk: Since services are
intangible and often involve personal interaction, customers may perceive
them as risky. Communication helps:
 Reassure customers of service reliability
 Showcase credentials, customer reviews, and guarantees
 Clarify what outcomes to expect
5. To Influence Purchase Intent: A key communication objective is to
motivate customers to buy. This is normally done through persuasive
advertising, which involves emphasis of your superior benefits to the user,
usually relative to competitors. It is critical to strike a chord with the
underlying need or want that triggers a customer to act.
6. To Manage Customer Expectations: Mismatch between what is
promised and what is delivered is a major cause of dissatisfaction.

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Marketing communication sets realistic and clear expectations, so

customers know what they’re paying for, what the process entails, and
what outcomes to expect. This minimizes confusion and disappointment,
improving the overall service experience.
7. To stimulate Trial Purchase: Two separate but closely related
communication objectives are to stimulate trial use and drive repeat
purchases. Free trials or product samples are common techniques to
persuade customers to try your product for the first time. The goal is to
take away the risk and get the customer to experience your brand.
8. To Drive Brand Switching: Another objective closely tied to stimulating
trial use is driving brand switching. This is a specific objective of getting
customers who buy competing products to switch to your brand. Tide
detergent is normally pitted against “other leading brands” in
comparative ads intended to motivate brand switching.
The Marketing Communications Mix (or) Marketing Communications
Tools
The marketing communications mix consists of a set of tools (disciplines)
that can be used in various combinations and different degrees of intensity in
order to communicate with a target audience. There are five principal
marketing communications tools: advertising, sales promotion, public
relations, direct marketing and personal selling.
Advertising: Advertising is a non-personal form of mass communication
that offers a high degree of control to those responsible for the design and
delivery of advertising messages. The flexibility of this tool is good because it
can be used to communicate with a national audience or a particular
specialised segment. Although the costs can be extremely large, a vast
number of people can be reached with a message, so the cost per contact
can be the lowest of all the tools in the mix. Advertising helps service
businesses like banks, hospitals, and telecom companies to reach wide
audiences and build brand credibility.

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Personal Selling: Personal selling is traditionally perceived as an

interpersonal communication tool that involves face-to-face activities
undertaken by individuals, often representing an organisation, in order to
inform, persuade or remind an individual or group to take appropriate action,
as required by the sponsor’s representative. A salesperson engages in
communication on a one-to-one basis where instantaneous feedback is
possible. The costs associated with interpersonal communication are
normally very large. Useful in insurance, real estate, consulting, and
education services where personal persuasion builds trust and aids decision-
making.
Sales Promotion: Sales promotion comprises various marketing techniques
(Free trials, Discounts or limited-time offers, Loyalty points or bonus services,
etc.) that are often used tactically to provide added value to an offering, with
the aim of accelerating sales and gathering marketing information. Like
advertising, sales promotion is a non-personal form of communication, but it
has a greater capability to be targeted at smaller audiences. Promotions
reduce the perceived risk of trying a new service and stimulate trial or repeat
use (e.g., free gym week, discounted spa service).
Public Relations and Publicity: Public relations is ‘the art and social
science of analysing trends, predicting their consequences, counselling
organisations’ leadership, and implementing planned programmes of action
which will serve both the organisation’s and the public interest. The
increasing use of public relations, and publicity in particular, reflects the high
credibility attached to this form of communication. Publicity involves the
dissemination of messages through third-party media such as magazines,
newspapers or news programmes. There is no charge for the media space or
time, but there are costs incurred in the production of the material. There is a
wide range of other tools used by public relations, such as event
management, sponsorship and lobbying.
Direct Marketing: The growing utilisation of direct marketing by
organisations over recent years has been significant. It signals a shift in focus

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from mass to personalised communications. In particular, the use of direct

mail, telemarketing and the fast-developing area of interactive
communications represents through-the-line communications. By removing
the face-to-face aspect of personal selling and replacing it with an email
communication, a telephone conversation or a direct mail letter, many facets
of the traditional salespersons’ tasks can be removed, freeing them to
concentrate on their key skill areas. Allows personalized communication,
reminders, appointment confirmations, and upselling—common in salons,
clinics, and travel agencies.
These five elements of the promotional mix are supplemented by two more
effective forms of marketing communication
Word-of-mouth: Word-of-mouth recommendation is one of the most
powerful marketing communication tools, and the more effectively an
organisation can develop a programme to harness and accelerate the use of
personal recommendation. Involves satisfied customers spreading positive
messages about the service. This can be organic or stimulated through
referral programs and reviews. Vital in services where trust and experience
are key—like hotels, healthcare, and legal services. Potential customers often
rely on reviews, testimonials, and referrals.
Online and Digital Marketing: Utilizing digital platforms to promote
services and engage customers interactively. Channels like social media
(Instagram, LinkedIn), Websites and SEO, Influencer marketing, Webinars and
live chats. Essential for brand presence and engagement, particularly in
hospitality, e-learning, and fintech services.

The role of Marketing Communication

Communication plays a crucial role in service marketing as it is the primary
means by which service providers interact and engage with their customers.
Here are some key roles of communication in service marketing:
1. Service Promotion: Effective communication helps promote services to
target customers. It involves conveying the value, benefits, and unique

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features of the service through various communication channels such as

advertising, social media, websites, and brochures. Communication helps
create awareness and generate interest in the service, encouraging
customers to consider and engage with it.
2. Service Differentiation: Communication allows service providers to
differentiate their offerings from competitors. Through clear and compelling
messaging, service providers can highlight what sets their service apart and
why customers should choose them over alternatives. Effective
communication helps establish a unique value proposition, building a
competitive advantage in the market.
3. Service Information and Education: Communication provides essential
information and educates customers about the service. It helps customers
understand how the service works, its benefits, features, pricing, terms and
conditions, and any relevant policies. Clear and transparent communication
ensures that customers have the necessary information to make informed
decisions and set realistic expectations.
4. Customer Engagement and Relationship Building: Communication
helps in engaging customers and building strong relationships. Service
providers can interact with customers through various channels such as
phone calls, emails, live chats, and social media. Effective communication
fosters trust, addresses customer queries and concerns, and creates a
positive customer experience. Building rapport and maintaining open lines of
communication contribute to customer satisfaction, loyalty, and repeat
business.
5. Service Feedback and Improvement: Communication allows service
providers to gather feedback from customers regarding their experiences.
Customer feedback helps identify areas for improvement, address issues,
and refine the service offering. Through effective communication channels,
service providers can actively listen to customer feedback, respond
promptly, and take necessary actions to enhance the service quality and
customer satisfaction.

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6. Service Recovery: In cases of service failures or customer

dissatisfaction, communication plays a vital role in service recovery. Open
and empathetic communication allows service providers to listen to
customer concerns, apologize if necessary, and take appropriate measures to
resolve issues. Effective communication during service recovery can turn a
negative experience into a positive one and restore customer confidence.
7. Bridges the Intangibility Gap: Since services cannot be seen, touched,
or tested before purchase, communication tools such as advertising, digital
content, and personal selling help illustrate the value and visualize the
service for customers. A spa advertises stress relief benefits using calming
imagery and customer testimonials.
8. Generating Leads and Sales: Ultimately, marketing communication is
about driving sales. It should encourage consumers to take action, whether
it's making a purchase, signing up for a newsletter, or requesting more
information. Calls to action (CTAs) are essential for this purpose.
9. Market Research and Feedback: Marketing communication can serve
as a channel for collecting feedback from customers and monitoring market
trends. This information can be invaluable for refining products or services
and adapting marketing strategies.

Product/Service delivery
Service delivery simply refers to the delivery of a service from a business to
a customer. It invites the opportunity to impress your customers and show
them the value you offer. It can help to create a great relationship with
clients and secure retention. This includes the regular interactions between
the two parties throughout the entire process of the business supplying the
service and the client purchasing it. It encompasses all aspects of providing a
service to a customer, including the initial interaction, onboarding, set up,
conclusion of the service and follow-up provisions.
This process ensures that the service is effectively delivered, meets
customer expectations, and aligns with the agreed-upon standards or

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service-level agreements (SLAs). Service delivery is crucial across various

industries, including IT, healthcare, telecommunications, and financial
services, where it directly impacts customer satisfaction, retention, and
overall business performance.
"Service delivery is the interaction between the service provider and the
customer, where the promised service is executed and the customer’s
expectations are met or exceeded." _____ Kotler & Keller
"The provision of a service by an organization to a customer, including all
interactions and processes that contribute to the fulfillment of the customer's
needs." __________ ISO 9000 Quality Standards
The interaction between a service company and its existing or potential
customers can take place in three possible ways:
 Customer visits the service provider: The location of the service
firm assumes a lot of importance when the customer visits the service
provider. The location of the service provider can convey the tangibility
of the service, and thus reduce the risk perceived by the customers in
consuming the service. The location of restaurants, health clubs, beauty
clinics, banks, etc., conveys the quality, availability, accessibility and
reliability of the services to the customer.
 Service provider visits the customer: The location of the service
provider is not important when the service provider visits the customer.
However, the speed of service and its quality are given high importance
in this case. Therefore, the service provider needs to stress on the
location to facilitate operations that deliver fast and high-quality service
to customers. For example, banks have introduced the concept of giving
loans and opening new accounts at the doorstep of the customer. In
these cases, the quality of information provided by the service personnel
and the speed at which the transactions take place, gain greater
importance.
 Distant interaction: Location is least important when the service
provider and customers interact from a distance. Examples of these

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service include internet banking, mobile banking, online reservations,

etc. The location of utility service providers like electricity, telecom, etc.,
is also given less importance.
Channel Decisions
In situations where direct marketing of services is not feasible, service
providers use intermediaries to market and sell their services. These
intermediaries are known as distribution or marketing channels. Thus, there
are three participants in the service delivery process, namely, the service
provider, customer and the intermediaries. Service delivery can be done
through directly by company or intermediaries.
Following Fig. gives a diagrammatic representation of various channels
available to the service providers.

Direct Distribution: Direct distribution of service takes place when a

service provider directly delivers the service to the customer without any
intermediaries in the process. Examples of these services include medical
service, beauty care and health care, consultancy, education, entertainment,
etc. Due to the perishable, intangible, and variable characteristics of
services, most of them are directly distributed to the customer.
Types of Intermediaries for Service Delivery

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Some service organizations choose alternative channels of distribution for

various reasons like lowered risk and wider reach. They distribute services
through intermediaries like franchisees, agents and brokers, and electronic
channels. Let us discuss these three intermediaries in detail:
Franchising: Franchising is being used widely by service organizations to
distribute their services, as more and more businesses are looking at
expanding across the borders. A franchiser licenses his brand name,
services, business processes, etc., and in return, charges a fee and royalties
from the franchisee. For example, McDonald’s franchisees follow the service
standards set by the franchiser, i.e., McDonald’s. Intermediaries also form a
bridge between the company and the customers. Standardized services can
be distributed through this channel, but it is not easy to distribute
customized services. Duplication of standardized services can take place
through promotional activities, guarantees offered, type of branding chosen,
and through the delivery processes. This might not be easy while dealing
with customized services like medical or legal facilities.
Agents and Brokers: Agents and brokers are forms of intermediaries who
work on behalf of the principal or owner of the services. Further, an agent is
a bridge between the customers and the service company and is enabled to
make agreements between the customers and the service company. For
example, agents of LIC (Life Insurance Corporation of India Ltd.,) explain the
various products offered by the company and make insurance policies
between the customers and the company. These agents and brokers are
given the legal authority to market the company’s services on behalf of the
principal. They are paid by the principal in the form of commissions, for their
services.
Electronic Channels: Service companies that adopt electronic channels for
distribution do not require direct interaction with customers. Telephone and
television have been the original channels of distribution through the
electronic media; new additions to this distribution channel include the
internet, which has come to play a very powerful role. Technological

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advances have helped improve the service delivery processes to offer

greater convenience to the service providers as well as the customers.
Online booking of movie and travel tickets, distance learning, remote health
services, videoconferencing, and web games are examples of services that
are a direct result of technological improvements.
Strategies for Effective Service Delivery
An effective service delivery requires an effective management of the
channels used for distribution. Let us discuss the control, empowerment and
partnering strategies adopted by service companies.
Control Strategies: Service companies that offer unique services, and
enjoy high demand and customer loyalty can use control strategies. The
service principal using these strategies believes that intermediaries perform
best when they are given standard instructions on the service quality and
revenue generation, and are rewarded for their performance. These
strategies require the active participation of the service principal. The two
important aspects of a control strategy are measurement and review.
 Measurement The service principal should find ways to measure the
performance of the intermediaries on a regular basis. Conducting
customer surveys provides feedback on the level of service provided
by the franchisees. Franchisers may choose to reward the
intermediaries based on their performance.
 Review: Franchisers can exert control over franchisees through non-
renewals, restricted supplier resources, quotas and terminations.
Franchisers can also offer price breaks to franchisees for achieving a
certain volume of sales quota.
Empowerment Strategies: A service principal adopting empowerment
strategy believes that the participative style of intermediary management
delivers the best results. These strategies are chosen by service principals
who have recently started business. The different activities involved in
adopting and implementing the empowerment strategy are discussed below.

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 Enabling intermediaries to develop customer-oriented service

processes: This strategy can be implemented by providing one
necessary support to the intermediaries to set and maintain the
service standards, as they lack the funds to conduct customer research
or impart training to their employees.
 Providing required support systems: The service principal should
help the intermediaries by offering them the support systems required
for efficient performance. These may be standard processes, quality
standards, etc., that help in implementing, improving, and measuring
services.
 Motivating intermediaries to deliver consistent quality service
In this strategy, the service principal aims to provide training or
implement other development programmes for service personnel of
intermediaries to enhance their skills and knowledge on delivering
quality service consistently. This includes rewarding the desired
performance.
 Adopting cooperative management structure: This strategy aims
at adopting a cooperative management structure by reducing the
number of management levels at the service outlets and empowering
franchisees to develop their own methods of hiring and training
employees. This motivates the franchisees and improves their morale.
Partnering Strategies: Partnering strategies are considered the most
effective as they improve the relationship between the service principal and
the intermediaries. Further, both the service principal and the intermediaries
collectively learn new ways to improve the service delivery, and understand
the changing tastes of target customers to change the service offering
accordingly.
 Alignment of goals: This strategy aims at aligning the goals of the
service principal and those of the intermediaries. Intermediaries can
set their individual targets to deliver quality service to the customers
and to achieve their target revenues and profits. The principal does not

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interfere in the process and steps in only when the intermediary

desires.
 Participation and cooperation: In this strategy, a service principal
consults his intermediaries before introducing any new policies or
policy changes. The views and opinions of intermediaries are
considered important in decision-making. This strategy makes the
intermediaries feel that they are also part of the business. They are
motivated and offer innovative ideas for improving the system of
service delivery.

Unit-5: Building and Awareness:

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Meaning, nature of Building Brand Awareness (BBA), how to improve brand

awareness, application of building brand awareness, building brand
awareness on social media.
Brand Awareness
Brand awareness is the degree to which consumers recognize a product by
its name. Ideally, consumers' awareness of the brand not only means
recognition but also includes positive perceptions of the product versus the
competition. Brand awareness is the extent to which consumers are familiar
with a brand’s name, logo, products, or services. It determines how easily
customers recognize a brand when making purchasing decisions. High brand
awareness means customers can recall a brand without assistance, creating
trust and preference over competitors. Brand awareness is built over time
through consistent marketing efforts, quality offerings, and engaging
customer interactions. It enhances brand loyalty and increases the likelihood
of repeat purchases.
“Brand awareness is the ability of a potential buyer to recognize or recall that
a brand is a member of a certain product category.” _____ David Aaker
“The extent to which a brand is recognized by potential customers, and is
correctly associated with a particular service or need.” __ American
Marketing Association

Nature of Building Brand Awareness

Building brand awareness involves creating a lasting impression in the minds
of consumers so that they can recognize and recall a brand when making
purchasing decisions. It is not a one-time activity but a continuous, strategic
process that helps businesses establish a presence in the market, gain
customer trust, and create preference over competitors. The nature of
building brand awareness is dynamic, combining psychological influence,
marketing communication, and consumer engagement.
1. Strategic Communication and Messaging: The process of building
brand awareness begins with clear, consistent, and compelling

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communication. A brand must effectively communicate its identity,

values, and offerings through various channels such as advertising,
public relations, and digital media. The consistency of the message
across all platforms ensures that consumers can identify and relate to the
brand easily. Over time, these repeated interactions create familiarity,
which forms the foundation of awareness.
2. Creating Emotional Connections: Brand awareness is most powerful
when it goes beyond simple recognition and fosters an emotional
connection. This emotional resonance is achieved by understanding the
values, needs, and lifestyles of the target audience. Brands that evoke
positive feelings or meaningful experiences tend to stay longer in
consumers’ memory. These emotional bonds often lead to brand
preference and loyalty, making awareness more than a superficial
association.
3. Visibility Across Multiple Channels: In today’s digital age, building
brand awareness requires maintaining visibility across multiple platforms
including social media, websites, email campaigns, events, and
traditional media. Each platform plays a role in reinforcing the brand’s
image and message. Omnichannel visibility ensures that consumers
encounter the brand in different contexts and formats, which strengthens
recall and deepens engagement over time.
4. Consistency in Brand Identity: A core aspect of building brand
awareness lies in maintaining consistency in all brand elements such as
logos, color schemes, taglines, tone of voice, and overall visual identity. A
consistent brand presence helps establish a strong and recognizable
image in the minds of consumers. When customers see or hear
something that aligns with their previous experiences or impressions of
the brand, it strengthens their mental association with it.
5. Repetition and Reinforcement: Repetition is a key principle in building
brand awareness. The more often a consumer is exposed to a brand in a
positive context, the more likely they are to remember and trust it. This

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does not imply redundancy but rather the strategic use of frequent,
varied, and value-driven touchpoints. Each exposure reinforces the
brand’s presence and contributes to a deeper mental imprint.
6. Influence of Customer Experience: Customer experiences play a
critical role in building brand awareness. Every interaction a customer
has with a brand—from browsing a website to speaking with customer
service—contributes to their overall perception. Positive experiences
enhance the likelihood of word-of-mouth recommendations, social
sharing, and repeat business, all of which amplify brand visibility and
awareness organically.
7. Leveraging Storytelling and Content: Brands that utilize storytelling
and quality content can build stronger awareness by connecting with
audiences on a personal level. Stories about a brand’s origin, mission, or
customer success can humanize the brand and make it more memorable.
Content such as blogs, videos, and case studies educates, informs, and
entertains the audience, positioning the brand as a trustworthy and
familiar presence.
8. Partnerships and Influencer Involvement: Collaborating with
influencers, brand ambassadors, or strategic partners helps in extending
the brand’s reach to new audiences. When trusted individuals or brands
endorse or associate with a brand, their followers become more aware of
it. This form of social proof can be instrumental in increasing awareness
in specific markets or demographics.
9. Sustainability and Evolution: Building brand awareness is not a one-
time campaign but a continuous effort that evolves with market trends
and consumer behavior. As brands grow, they must adapt their
communication, update their identity, and remain relevant to their
audience. Sustaining awareness means staying top-of-mind and
continuously delivering value that resonates with changing consumer
expectations.

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Types of Brand Awareness

Brand awareness can be categorized into two primary types: aided
awareness and unaided awareness. These types represent different levels of
consumer recognition and recall of a brand.
1. Aided Awareness: Aided awareness refers to the level of brand
recognition or recall when prompted with specific cues or prompts. It
measures the extent to which consumers can identify or recall a brand when
given some form of assistance or information. For example, a consumer may
be shown a brand logo, name, or slogan and asked if they are familiar with it
or if they can associate it with a specific product or category. Example: In a
survey, if participants are asked, “Which of the following shampoo brands
have you heard of?” and they select “Head & Shoulders” from the list, that’s
aided awareness.
2. Unaided Awareness: Unaided awareness, also known as top-of-mind
awareness, represents the spontaneous recall of a brand from memory
without any prompts or cues. It indicates the strength of a brand in the
minds of consumers, as it demonstrates that the brand is readily accessible
and comes to mind naturally when considering a particular product or
service category. Unaided awareness is considered a higher level of brand
awareness and is often associated with stronger brand positioning and
consumer preference. Example: When asked to name a smartphone brand
and the immediate response is “Apple,” the brand has achieved top-of-mind
awareness.
In addition to these primary types, brand awareness can also be further
categorized based on different dimensions or aspects:
3. Brand Recall: Brand recall refers to the ability of consumers to retrieve a
brand from memory when prompted with a product category or need
situation. It assesses the strength of brand associations in memory and
measures the likelihood of consumers recalling a particular brand when
considering a specific product or service. Example: If someone is asked to

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name a fast-food chain and they say “McDonald's” without seeing a logo or
advertisement, that’s brand recall.
4. Brand Recognition: Brand recognition represents the consumer's ability
to identify or recognize a brand when exposed to it or its associated cues. It
is the consumer's familiarity with the brand and the ability to differentiate it
from other brands in the marketplace. Brand recognition is often tested by
presenting consumers with brand elements such as logos, packaging, or
advertising materials and assessing their ability to correctly identify the
brand. Example: When a consumer sees a red can and immediately
recognizes it as Coca-Cola without reading the label, that’s brand
recognition.

Strategies to building Brand Awareness

1. Content Marketing Strategy: Content marketing is one of the most
effective and sustainable ways to build brand awareness. By creating
valuable, relevant, and consistent content—such as blog posts, videos,
infographics, or podcasts—brands can educate and engage their audience.
Over time, this builds recognition and trust. Example: A financial advisory
firm that regularly publishes articles on investment tips and economic trends
becomes a go-to source for financial knowledge. As readers engage with the
content, they become more familiar with the brand.
2. Social Media Engagement: Social media platforms allow brands to
connect directly with their audience in a personal and engaging way. Regular
posting, interactive content like polls or live Q&As, and user-generated
content help to keep the brand top-of-mind. Example: A skincare brand
using Instagram to share tutorials, behind-the-scenes videos, and customer
reviews can quickly build a community and enhance brand visibility.
3. Influencer Collaborations: Partnering with influencers helps brands
reach new audiences through trusted voices. Influencers already have
established relationships with their followers, so endorsements feel more
authentic than traditional ads. Example: A travel agency partnering with a

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popular travel vlogger to showcase exclusive packages can attract a large

number of travel enthusiasts and increase brand exposure.
4. Public Relations and Media Coverage: Securing press coverage in
newspapers, magazines, online publications, or TV builds credibility and
makes a brand more recognizable. Press releases, interviews, and media
features can spotlight brand achievements and initiatives. Example: A start-
up launching an eco-friendly product may issue a press release and get
featured in an environmental magazine, which helps boost awareness among
environmentally conscious consumers.
5. Search Engine Optimization (SEO): SEO ensures that a brand’s
content appears prominently in search engine results when people look for
relevant information. A strong SEO strategy increases organic traffic and
improves visibility over time. Example: A local real estate company
optimizing its website for keywords like “best property dealers in [city]” can
attract high-intent visitors who may not have heard of the brand otherwise.
6. Sponsorships and Events: Sponsoring events, causes, or community
programs allows a brand to gain public exposure while aligning with
audiences’ interests. This can include both physical and digital events.
Example: A tech brand sponsoring a national coding competition for
students not only builds awareness among youth but also positions itself as a
promoter of education and innovation.
7. Referral and Loyalty Programs: Encouraging existing customers to
refer others or rewarding repeat purchases creates brand advocates. These
programs help spread awareness through word-of-mouth, which is highly
trusted. Example: An online food delivery app offering free credits for every
referral can incentivize users to talk about the service, thereby expanding
brand awareness.
8. Branded Merchandise and Packaging: Using branded merchandise
like T-shirts, mugs, or bags, or creating unique, memorable packaging, helps
turn customers into walking advertisements. These items serve as visual
reminders of the brand. Example: A coffee shop handing out eco-friendly

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cups with creative branding can attract attention and increase awareness,
especially when customers reuse them in public.
9. Paid Advertising Campaigns: While organic efforts are valuable, paid
advertising—through Google Ads, social media, or display networks—can
provide a quick boost to brand visibility and reach new audiences. Example:
A fitness brand running targeted Facebook ads showcasing transformation
stories and limited-time offers can rapidly increase its reach and awareness.
10. Collaborations and Co-Branding: Partnering with another brand with
a complementary customer base helps both brands expand their reach. Co-
branded products or campaigns attract attention and create buzz. Example:
A fashion brand collaborating with a tech brand to launch a limited-edition
smartwatch combines audiences from both industries and builds awareness
for both partners.

Applications of Building Brand Awareness

Brand awareness serves as a foundation for all marketing and branding
efforts. Its primary purpose is to ensure that consumers recognize and recall
a brand when faced with purchase decisions. These applications influence
consumer behavior, drive competitive advantage, and facilitate market
expansion.
1. Enhancing Consumer Decision-Making: One of the most critical
applications of building brand awareness is its role in simplifying
consumer choices. When faced with numerous similar products or
services, consumers tend to gravitate toward brands they are familiar
with. Brand awareness reduces the cognitive load during decision-making
by offering a sense of trust and reliability. This application is especially
significant in competitive markets where differentiation may not always
be clear.
2. Supporting Product Launches and Extensions: Brand awareness is
vital when introducing new products or extending an existing product line.
If a brand already enjoys high visibility and recognition, launching a new

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product under the same brand umbrella becomes easier and more
effective. Consumers are more likely to try new offerings from a brand
they already know and trust, which reduces marketing costs and shortens
the adoption curve.
3. Strengthening Brand Equity: Building awareness contributes directly
to brand equity by increasing the perceived value of a brand. The more
aware customers are of a brand and its attributes, the more likely they are
to associate it with quality and credibility. This enhanced brand equity
provides a strong foundation for building customer loyalty, charging
premium prices, and gaining market share.
4. Creating Emotional and Psychological Bonds: Another important
application of brand awareness is its ability to foster emotional
connections between the brand and its consumers. As awareness deepens
over time, consumers begin to attach values, memories, and experiences
to the brand. This emotional branding strengthens customer relationships,
reduces churn, and increases advocacy, making it a valuable asset in
long-term marketing strategies.
5. Influencing Word-of-Mouth and Social Sharing: Brands that are
widely recognized tend to be more talked about, both online and offline.
Building brand awareness encourages customers to share their
experiences, recommend the brand, and engage in conversations about
it. This organic form of marketing, known as word-of-mouth, significantly
amplifies visibility and credibility. In the age of social media, increased
brand mentions and shares contribute to greater reach and influence.
6. Improving Customer Retention and Loyalty: A well-known brand that
maintains a consistent and positive image helps reinforce customer
loyalty. When consumers repeatedly encounter a brand across various
touchpoints and have consistent experiences, they are more likely to
continue buying from it. Brand awareness thus serves as a key tool for
building and maintaining long-term relationships with customers,
ultimately enhancing customer lifetime value.

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7. Supporting Digital Marketing Efforts: In digital marketing, brand

awareness plays a crucial role in driving traffic and engagement.
Campaigns focused on awareness can boost visibility on search engines,
increase social media interactions, and improve email open rates. By
becoming more familiar to the audience, a brand can increase its
effectiveness in performance-based marketing, where recognition often
leads to higher conversion rates.
8. Enabling Competitive Differentiation: In crowded markets, especially
where functional differences between products are minimal, brand
awareness acts as a critical differentiator. A brand that is more widely
known and positively perceived can stand out even if the offerings are
similar to those of competitors. Building brand awareness thus allows
businesses to carve a unique space in the market and defend their
position more effectively.
9. Attracting Business Partnerships and Opportunities: Established
brand awareness can also lead to more business-to-business
opportunities. Partners, investors, and distributors are more inclined to
collaborate with brands that have a strong public presence. Awareness
signifies reputation, credibility, and market potential, making the brand a
more attractive proposition for alliances and joint ventures.
10. Driving Revenue Growth and Profitability: Ultimately, the most
tangible application of building brand awareness is its impact on sales and
profitability. Brands that are well-known typically enjoy higher customer
acquisition rates, better retention, and stronger pricing power. These
advantages directly contribute to improved financial performance,
demonstrating that brand awareness is not just a marketing goal but a
business imperative.

Social Media Marketing

Social media marketing is a powerful strategy for businesses to engage with
their target audience, build brand awareness, and drive business growth. It

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involves leveraging social media platforms to create and share compelling

content, interact with users, and promote products or services. the
importance of social media marketing to build brand awareness as follows:
1. Reach and Audience Engagement: Social media platforms have
billions of active users worldwide, providing businesses with a vast audience
to reach and engage. According to We Are Social's Digital 2021 report, there
are over 4.89 billion social media users globally, representing a significant
opportunity for businesses to connect with potential customers. By utilizing
social media marketing, businesses can expand their reach, increase brand
visibility, and foster meaningful interactions with their target audience.
2. Brand Awareness and Reputation Management: Social media
marketing plays a crucial role in building brand awareness and managing
brand reputation. Platforms like Facebook, Instagram, Twitter, and LinkedIn
allow businesses to establish and maintain a consistent brand presence. By
sharing engaging content, providing valuable information, and actively
participating in conversations, businesses can shape their brand image and
perception among users. Positive interactions and authentic engagement on
social media platforms contribute to strengthening brand reputation and
loyalty.
3. Targeted Advertising: Social media platforms offer robust advertising
tools that allow businesses to target specific demographics, interests, and
behaviors. This level of targeting ensures that marketing efforts are directed
towards relevant audiences, increasing the likelihood of conversions and
return on investment (ROI). Platforms like Facebook and Instagram offer
detailed targeting options based on demographics, interests, and even user
behaviors, enabling businesses to deliver highly tailored messages to their
desired audience.
4. Customer Relationship Building: Social media marketing provides an
opportunity for businesses to build and nurture relationships with their
customers. By actively engaging with users through comments, direct
messages, and personalized responses, businesses can create a sense of

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community and establish a two-way communication channel. This interaction

fosters customer loyalty, strengthens brand-consumer relationships, and
enhances customer satisfaction and retention.
5. User-Generated Content and Influencer Marketing: Social media
platforms facilitate user-generated content (UGC) and influencer marketing,
both of which can significantly impact brand awareness and credibility. UGC
involves users creating and sharing content related to a brand or its
products, which not only increases brand exposure but also acts as social
proof of customer satisfaction. Influencer marketing, on the other hand,
involves collaborating with social media influencers to promote products or
services to their engaged audience, leveraging their credibility and reach.
6. Real-Time Feedback and Market Insights: Social media platforms
provide businesses with real-time feedback from their audience, enabling
them to gauge customer sentiment, gather insights, and make data-driven
decisions. Through comments, reviews, and social media listening tools,
businesses can monitor discussions, identify trends, and uncover valuable
insights about their target market. This information can be used to improve
products, refine marketing strategies, and stay ahead of competitors.
Building Brand Awareness on Social Media
1. Define Service-Specific Goals: Start by identifying what you want to
achieve with your social media presence. For services, goals often focus on
educating potential customers about what you offer, building trust,
showcasing expertise, and generating inquiries or leads. Clear objectives
guide all other steps.
2. Identify and Understand Your Target Audience: For services, it’s
crucial to deeply understand your ideal customers—their needs, pain points,
preferences, and the platforms they use. Since services are intangible,
knowing exactly what problems your audience faces helps tailor your
messaging to highlight how your service solves those problems.
3. Craft a Consistent Brand Personality and Message: Services rely
heavily on trust and reputation, so your social media presence should

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communicate professionalism, reliability, and empathy. Develop a consistent

tone of voice—whether formal, friendly, or approachable—and use visuals
that reflect the service experience. Testimonials, certifications, and case
studies can reinforce credibility.
4. Select the Most Relevant Social Platforms: Not all social media
platforms suit every service. For example, LinkedIn works well for B2B
services like consulting or legal advice, while Instagram or Facebook may be
better for wellness, education, or hospitality services. Choosing platforms
where your audience actively seeks information is key.
5. Produce Educational and Value-Driven Content: Since services are
intangible, focus on content that demonstrates your expertise and the
benefits of your service. This can include how-to videos, explainer posts,
client testimonials, FAQs, live Q&A sessions, and behind-the-scenes looks.
The goal is to make your service tangible and relatable.
6. Plan and Maintain a Content Schedule: Consistently posting content
helps build familiarity and trust over time. Develop a content calendar that
balances promotional posts with educational, inspirational, and engagement-
driven content. Regular posting keeps your service visible and reinforces
your brand image.

7. Engage Actively with Followers: Social media for services is about

building relationships. Promptly respond to comments and messages,
acknowledge feedback, and participate in conversations. Engagement
creates a sense of personal connection and trust, which is vital for service
purchases.
8. Utilize Hashtags and Local Targeting: Use relevant hashtags to reach
audiences interested in your service niche. For location-based services,
include local hashtags and geo-tags to attract nearby customers. This
increases the chance that your brand appears in relevant searches and local
discovery.

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9. Incorporate Social Proof and Testimonials: Services depend greatly

on trust, so sharing customer testimonials, reviews, case studies, and
success stories builds social proof. Feature client stories or before-and-after
results to show real impact and reassure potential customers.
10. Use Paid Social Advertising and Retargeting: Invest in targeted ads
to reach a wider or more specific audience. For services, lead generation ads,
event promotions, or retargeting campaigns (to people who have visited your
website or interacted with content) are especially effective in converting
interest into inquiries.
11. Track Metrics and Refine Strategy: Regularly analyze performance
metrics such as engagement, reach, follower growth, and conversion rates.
Service businesses should especially monitor inquiries and leads generated
through social channels. Use insights to adjust your content and targeting to
better meet audience needs and maximize brand awareness.

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