We take into account the various concepts related to
marketing. It attempts to define their relevance, characteristics and utility.
. When an organization knows who buys (or uses) the goods and services it
offers; why, where, when and how they buy; what if the goods (or services)
satisfy them and what may be done to increase the satisfaction, it is possible
for the organization to increase its effectiveness as well as reduce wastage of
resources. Marketing helps to match the organization’s human, financial and
physical resources with the wants of customers along with maximum economy and
efficiency.
Customers
do not always run to a producer and demand supplies, however useful and
valuable the product may be. They will not make the effort to buy, if the
effort is not commensurate with the perceived value. It must be available when
needed, at places that are convenient and at prices that seem reasonable. They
have to know what is available, where and at what price. Often they have to be
persuaded that the purchase is beneficial to them. This is even so for products
that apparently meet an important need. Health check-up programmes, financial
arrangements to meet contingencies of death and old age are some examples.
Services
are bought by customers and they produce satisfaction. The producing
organization creates a capacity through human financial and physical resources
for rendering the services. Most effective utilization of these resources is
possible through the application of marketing concepts. You must remember that
tourism is a service oriented industry.
What
is marketing?
An
organization procures resources from the environment at a cost. It arranges for
the utilization of these resources to produce goods and/or services. These are
offered to consumers in the environment, who avail of these outputs and
experience satisfaction there from. The procurement and utilization of
resources is done through processes and practices relating to finance,
personnel, production, materials, ancillaries, vendors and so on. All these
processes, practices and activities relating to the production of the output
have no justification, if the consumer, who avails of the output, is not
satisfied with it. The consumer will then not buy what is offered as output. To
win keep a customer is the purpose of all organizations. The customer is
therefore, central to an organization’s purposes. Marketing links the customer,
who is the core, to processes, practices and activities.
Marketing
and Decision Making Processes
Marketing
looks at the decision making processes of both the producer and the customers.
It tries to bring these two processes together in an exchange transaction. If
there is no exchange, there is no marketing activity. If the exchange is by
compulsion, then again, there is no marketing. Marketing is relevant only when
there is freedom of decision on the part of both producers and customers. An
organization has to create, produce and deliver goods and services that
customers value and want at prices which are relatively attractive-particularly
when compared with competition.
For
example, an owner of a big hall can make money by renting it out for marriage
purposes. The person hiring it also needs at the same time, a decorator, a
caterer, and so on. If the hall owner can make arrangements for these also as
part of a single package, he is enhancing the value of his offer and providing
greater satisfaction.
Functions of Marketing
1. Add value, by finding a better match between the product
and needs.
2. Reduce wastage, which would otherwise occur if the product
is not needed or production does not match demand.
3. Improve effectiveness of communication through b etter
targeting of messages,
4. Cut costs, through more effective distribution
arrangements, and
5. Improve better understanding between marketer and customer
because of increased contracts.
The concepts of marketing were developed in relation to
consumer goods. These concepts are however relevant to services as well.
Whether goods or services.
Consumer does not buy a product for its technical features or
for what it can do. He buys for the benefits that can be derived there from. He
buys a cluster of values which are intangible. For example, a shirt is not
bought only because of consideration of comfort, exclusiveness or to appear
'macho'. All these are vague thoughts, difficult to evaluate and of different
importance to different people.
Marketing
may not have much of a role in a controlled economy in cases where the consumer
has no options or in conditions of scarcity.
Relevance of Marketing
Marketing concepts are relevant even in the absence of
competition. A monopoly producer also has to generate revenue through sales.
Sales will not increase through increased production if the:
1. Existence of the product is not known
2. Need for the product is not felt
3. Price is not considered appropriate to value or
4. Product is not available at convenient place or times.
A
felt need attracts the customer to the product, enhances its value and provides
satisfaction. This leads to an increase in sales.
Marketing Mix
Marketing
concepts had been originally developed in the context of tangible consumer
goods. The main elements of a marketing programme are conceptualized in terms
of four (4) Ps-Product, Price, Promotion and Place. It is by marketing
adjustments and changes in one or more of these four (4) Ps that the
attractiveness to the customer could be strengthened. These four elements are
known as the marketing mix. The marketer could mix these in different ways for
maximum effectiveness, like a chef mixes the same ingredients in different ways
to achieve high levels of satisfaction.
In the case of services, three additional Ps are included in
the marketing mix. These are People, Process and Physical Factors. Services are
performed by people and they constitute an integral part of the service
product.
The process of performing the service corresponds to the
process of production of goods. But in the service business, the process is in
operation at the time of consumption by the customer. He is part of the process
of production the way the process is managed affects the satisfaction
experienced by each consumer. Process, like people, is an integral part of a
service product.
Services are bought and rendered mostly in the premises of
the service producer and rarely in the customer's premises. In case of tourism
a customer has to go to a destination. The physical surroundings add to the
tourists' satisfaction. Hence, decor, sounds, colour, artefacts, layout etc. At
the premises where the services are rendered need a careful attention.
Each of the elements in the marketing mix is important and
has an influence on the customer. None of them can be ignored. However, the
marketer has a choice of concentrating on one or more of the elements to create
the necessary impact on the market.
We
will deal with promotion later. This Unit deals with the product. The other Ps
applies differently to the variety of products that together constitute the
tourism product.
Segmentation and Target Market
The term 'market' refers to the collective
of existing and prospective customers for the product.
A hotel may be used by people who need to stay outside their
usual residence. A person may have no such need but if such a need arises later,
he is a prospective customer. Part of the marketing effort is aimed at such
prospective customers in the hope that whenever the need arises in future, they
will choose to buy the marketer's hotel services. There are however
limitations. For example, all persons who need to stay outside are not
prospective customer for the 5-star hotel users. Such parts are called segments
of the market.
The customers of a hotel are those who come to stay as well
as users of other facilities. They are different groups and each group
constitutes different segments in the sense that segmentations are possible on
the basis of lunch time users and late night users of the restaurants because
they need different kinds of service. In the swimming pool, some hotels permit
training classes. The segments using the pools for training are different from
regular guests in terms of age, behaviour, attention required, hours spent in
the pool or nearby, cleanliness demanded and so on.
A
segment is discrete, identifiable, viable and appropriate. It is distinguished
by characteristics of purpose, needs, motivation, benefits and behaviour.
Segmentation is usually done on the basis of one or more of
the following characteristics:
1. Geographic-like region,
district, density of population, climate, urban-rural.
2. Demographic like family
size religion sex income occupation language education.
3. Psychographic like value
systems, life styles, personality types.
4. Buying behaviour like
volumes, frequency, delivery requirements, negotiated contracts (for long term
arrangements).
The tourist market may be segmented on the basis of:
a. Place or origin of tourists
b. Destination
c. Purposes of tour like holiday, pilgrimage, sightseeing,
shopping, etc.
d. Economic status and spending tendencies.
e. Demographic characteristics like age, sex occupation and
attitudes.
f.
Preferences for staying
like camping, luxury hotels, caravans, etc
g. Preferences of travel like air, sea, road or rail.
Each segment of the market differs in terms of needs and
expectation. No one .7"' organization can cater for the needs of all the
segments. Each organization has to decide on the particular segment or segments
it would cater to. The segment so identified is called the target segment. The
identification has to be made on the basis of what the organization identifies
as its objectives and its capabilities.
Having
identified the target market all activities will have to be planned and
executed keeping this target market in mind. The service being offered, the
messages in communication, the media used for communication, the pricing
policies, the arrangements to access the service, all have to be consistent
with preferences and behaviour patterns of the target market. For example, if
the hotel is targeting on the domestic tourists in the circuit of religious
places, there would be little point in advertising in business magazines or
providing foreign cuisine in the restaurant. Simple vegetarian food would
perhaps be more satisfying to its patrons.
The Service Product
A product is something that a producer makes
and offers to consumers to provide satisfaction of the needs. Service products
are different from goods in five major characteristics i.e.:
1. Intangibility,
2. Inseparability,
3. Heterogeneity,
4. Perishability,
5. Ownership.
1. Intangibility
While goods are tangible in the sense that they have physical
dimensions and attributes and can be seen, felt, or tasted, services are
intangibles. Take for example, and educational institution. One can see or
verify the building in which it is located, the facilities within etc. But none
of these determine the nature and quality of the education imparted by that
institution. The product (or education) provided is to be evaluated in terms of
the development of the knowledge, intellect and character of the alumni. This development may be perceived, but cannot be
measured. Hence, this critical factor that constitutes education and the output
from the institution is intangible.
One cannot see, feel, smell, touch or measure a service
performed. It can only be experienced from the effects produced. When a doctor
examines a patient and makes a decision about diagnosis and treatment, what he
does is to tap the chest, hear the sounds, and read the instruments (or
reports). That is not what he is paid for. He is paid for his knowledge, his
experience, his training, the meaning that he makes of what he feels, hears and
reads and the remedy he prescribes. This application of knowledge and making. /
of meaning is intangible. If the patient is cured, the effect of the service is
experienced as good. Otherwise, it is experienced as bad. It does not matter
what the doctor's qualifications may be.
The
characteristic of intangibility lies on a continuum with pure goods at one end
and pure services at the other, with most products lying away from the two
extremes. Similarly, services can be distinguished between "pure
intangible" (education, information, consultancy) services which add value
to a tangible product (laundry, decor) and services that make available tangible
product (retailing, financing).
2. Inseparability
A physical item is produced in a factory, bought in a shop
and consumed in the customer's premises at his convenience. But when one buys a
service like a courier or a doctor, the production and consumption of the service
takes place at the same time. The service product being an intangible, as
experienced by the customer, exists only during the experience and that is when
it is produced as well as consumed or used. The service in a restaurant is the
courtesy of the waiter. Courtesy is, as the customer perceives it, at the time
of behaviour, not before or after. It is produced by the waiter and consumed by
the customer simultaneously. Hence, the production and consumption cannot be
separated.
Education takes place in the interaction of the teacher and
the student. Both teaching (production) and learning (consumption) happen
together. If there is no learning, there is no teaching. Hence, the product
exists only when the consumption takes place.
In a class of many students, a teaching session of one hour
may cause different levels of learning among the students. What the teacher did
in that one hour is the same but each student received it differently. The
product of teaching was different to each student, depending on the nature of his consumption (learning). Hence, the product was
received with varying consumption levels.
3. Heterogeneity
Because of the factor of inseparability it is not possible to
produce a service in advance according to specified standards. Both production
and consumption being by humans, the product of service as experienced, may not
be of consistent quality. What is "excellent" to one, may not be so
to another.
In a conducted tour or in a restaurant, the service quality
is also influenced by the behaviour of the companions. Yet, the dissatisfaction
experienced is not always attributed to the companions, but to services
providers.
An optician sells glass to correct vision. But what is bought
by the customer is not merely better vision, but also fashion and appearance.
An optician who is technically good at determining the proper refractive index
of corrective glasses has to enhance his service with a big range of frames and
tints of glasses which the consumer can try out on his face. The service must
also include speed of delivery, depending on the urgency of the consumer. The
customer may need help in making choices of frame and glass. A choice cannot be
made from a catalogue. The choice depends on the "fit" of the frame
to the face of the customer as seen by the customer himself.
4. Perishability
The
demand for crackers is very high during the New Year season. A manufacturer of
crackers makes them well in advance of the season, stocks them at various
places, and sells the whole stock during the season. If the goods are not
consumed while being produced, they can remain in stock till the consumers are
available. The crackers do not perish during storage. They retain their full
valued vegetables, though perishable over time can also be stocked for
subsequent consumption through processes like refrigeration and canning. But
the supply of services cannot be stored. If an advertisement is not seen or
read, it dies. It has gone waste. If the available seats in a cinema are not
used during a show, they cannot be added on to the next show. If the supply is
not used, it perishes. So also the seats in an aircraft or rail car, the rooms
in a hotel, the space in a ship, the services of a tourist guide, the time of a
consultant etc. All perish if not utilized when available. The loss of revenue
cannot be made up. What is not sold cannot be carried forward as stocks to be
sold the next day or at any other time.
The ability to carry stocks gives the manufacturer of goods
some level of stability in his operations despite fluctuations in demand. If
the supply is short at any time, he can arrange deferred deliveries. The
consumer also can buy and store till he is ready to consume. The stability in
operation helps to improve recovery of costs. Such stability is not possible
for the producer or services because of the characteristic of perishability.
For example, if an airline has only 20 per cent occupancy, the costs of
operation do not come down to 20 per cent.
5. Ownership
No
ownership passes from seller to buyer in a service. The buyer only acquires the
right to certain benefits of what the seller offers. One may have the right to
use a hotel room or a railway berth for a period of time, but the ownership of
the room or remains with the hotel or the railways. Similarly, a doctor offers
services. 'There is no tangible good that he produces or offers. He uses
knowledge which is intangible and prescribes treatment which may be satisfying.
The treatment may or may not involve medicines. The ownership of the knowledge
of the doctor does not pass on to the patient, but the patient (customer) is
entitled to the benefits of that knowledge. However, in the case of goods the
ownership passes on to the buyer.
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