Service Sector Management-Nkumar-2010 - Copy

THE FOUNDATION OF SERVICES MARKETING...................................................................3Introduction:................................................................................................................................3Concept of Services.....................................................................................................................4Goods and services: A Comparative Analysis.............................................................................5Services Marketing......................................................................................................................6Salient features of Marketing Services........................................................................................7Services Marketing Concept........................................................................................................9Why Marketing of Services.......................................................................................................12Behaviourial Profile of Users....................................................................................................13Marketing Information Systems................................................................................................15Significance of Services Marketing...........................................................................................19Emerging Key Services.............................................................................................................20Building Services Aspiration.....................................................................................................22Services marketing mix - the 7 Ps (The concept)......................................................................24

BANK MARKETING...................................................................................................................29Introduction:..............................................................................................................................29Banking Marketing: The Concept.............................................................................................29Justification for Bank Marketing...............................................................................................32Users of Banking Services.........................................................................................................34Behavioural Profile of Users.....................................................................................................34Marketing Information System..................................................................................................35Market segmentation.................................................................................................................37Marketing mix...........................................................................................................................37Bank Marketing in the Indian Perspective.................................................................................40

INSURANCE MARKETING.......................................................................................................43Insurance Marketing: Introduction and Concept.......................................................................43Users of Insurance Services.......................................................................................................44Behavioural Profile of Users.....................................................................................................44Insurance Product Planning and Development..........................................................................46Insurance Market Segmentation................................................................................................48Marketing Mix of Insurance Marketing....................................................................................51The Insurance Regulatory and Development Authority (IRDA)..............................................59

MUTUAL FUND MARKETING.................................................................................................61Mutual fund advantage..............................................................................................................61Mutual Fund Investing vs. Stock Investing...............................................................................61Mutual Funds Industry in India.................................................................................................62Types of Mutual Funds Schemes in India.................................................................................63Types of mutual fund schemes..................................................................................................63Marketing Mix for Mutual Fund................................................................................................64Association of Mutual Funds in India (AMFI)..........................................................................67Career as a Mutual Funds Advisor............................................................................................68

TOURISM MARKETING............................................................................................................69Introduction and Concept..........................................................................................................69Users of Tourism Services.........................................................................................................73Behavioural Profile of Users.....................................................................................................73Product Planning and Development..........................................................................................74Market Segmentation.................................................................................................................76Marketing Mix...........................................................................................................................76

EDUCATION MARKETING.......................................................................................................82Innovative Education: Introduction and Concept:.....................................................................82Education in India......................................................................................................................82Strategies for Education Marketing...........................................................................................84Marketing mix for Adult Education..........................................................................................85Marketing mix for Elementary Education.................................................................................88Marketing mix for Secondary Education...................................................................................90Strategic marketing for Secondary Education...........................................................................93Marketing mix for Intermediate Education...............................................................................94Marketing Mix for Higher Education........................................................................................95Strategic Marketing for Higher Education................................................................................97

HOSPITAL MARKETING...........................................................................................................99Hospital: Conceptual Framework..............................................................................................99Types of hospitals....................................................................................................................100

Service Sector Management: BBA-III. - 1 -

Emerging Trends in Medicare.................................................................................................101Marketing Medicare.................................................................................................................102Justification for marketing Medicare.......................................................................................103Thrust Areas For Medicare Services.......................................................................................104Marketing Mix for Hospitals...................................................................................................105

TELECOMMUNICATIONS SERVICES...................................................................................111Introduction..............................................................................................................................111Telecommunication Marketing : Concept...............................................................................111Rationale behind Telecommunication Marketing...................................................................114Marketing mix.........................................................................................................................116Telecommunication Marketing In Indian Perspective.............................................................118

COURIER SERVICES................................................................................................................121The concept..............................................................................................................................121Rationale Behind Courier Marketing.......................................................................................125Marketing mix.........................................................................................................................125Courier Services Marketing In Indian Perspective..................................................................126

AUTOMOBILE SERVICES.......................................................................................................130Introduction..............................................................................................................................130Automobile Services: Concept................................................................................................130Rationale Behind Automobile Services Marketing.................................................................130Marketing Mix.........................................................................................................................131Automobile services marketing in Indian Perspective...........................................................135

SAMPLE QUESTION PAPERS.................................................................................................137


THE FOUNDATION OF SERVICES MARKETING

Introduction:

What is a Service?

In economics and marketing, a service is the non-material equivalent of a good. Service provision has been defined as an economic activity that does not result in ownership, and this is what differentiates it from providing physical goods. It is claimed to be a process that creates benefits by facilitating either a change in customers, a change in their physical possessions, or a change in their intangible assets.

Dictionary definitions of "Intangible":

1. Lacking substance or reality; incapable of being touched or seen

2. Incapable of being perceived by the senses especially the sense of touch

3. (Of especially business assets) not having physical substance or intrinsic productive value

By supplying some level of skill, ingenuity, and experience, providers of a service participate in an economy without the restrictions of carrying stock (inventory) or the need to concern themselves with bulky raw materials. On the other hand, their investment in expertise does require marketing and upgrading in the face of competition that has equally few physical restrictions.

Key attributes of Services

Services can be described in terms of their main attributes.

Intangibility - They cannot be seen, handled, smelled, etc. There is no need for storage. Because services are difficult to conceptualize, marketing them requires creative visualization to effectively evoke a concrete image in the customer's mind. From the customer's point of view, this attribute makes it difficult to evaluate or compare services prior to experiencing the service.

Perishability - Unsold service time is "lost", that is, it cannot be regained. It is a lost economic opportunity. For example a doctor who is booked for only two hours a day cannot later work those hours— she has lost her economic opportunity. Other service examples are airplane seats (once the plane departs, those empty seats cannot be sold), and movie tickets (sales end at a certain point).

Lack of transportability - Services tend to be consumed at the point of "production" (although this doesn't apply to outsourced business services).

Lack of homogeneity - Services are typically modified for each client or each new situation (customised). Mass production of services is very difficult. This can be seen as a problem of inconsistent quality. Both inputs and outputs to the processes involved providing services are highly variable, as are the relationships between these processes, making it difficult to maintain consistent quality.

Labour intensity - Services usually involve considerable human activity, rather than a precisely determined process. Human resource management is important. The human factor is often the key success factor in service industries. It is difficult to achieve economies of scale or gain dominant market share.

Demand fluctuations - It can be difficult to forecast demand (which is also true of many goods). Demand can vary by season, time of day, business cycle, etc.

Buyer involvement - Most service provision requires a high degree of interaction between client and service provider.


Client-Based Relationships - Is based on creating long-term business relationships. Accountants, lawyers, and financial advisers maintain long-term relationships with their clients for decades. These repeat consumers refer friends and family, helping to create a client-based relationship.

Service delivery

The delivery of a service typically involves five factors:

The service providers (e.g. the people) Equipment used to provide the service (e.g. vehicles, computers) The physical facilities (e.g. buildings, parking, waiting rooms) The client Other customers at the service delivery location Customer contact

The service encounter is defined as all activities involved in the service delivery process. Some service managers use the term "moment of truth" to indicate that defining point in a specific service encounter where interactions are most intense.

Many business theorists view service provision as a performance or act. The location of the service delivery is referred to as the stage and the objects that facilitate the service process are called props. A script is a sequence of behaviours followed by all those involved, including the client(s). Some service dramas are tightly scripted, others are more ad lib. Role congruence occurs when each actor follows a script that harmonizes with the roles played by the other actors.

In some service industries, especially health care, dispute resolution, and social services, a popular concept is the idea of the caseload, which refers to the total number of patients, clients, litigants, or claimants that a given employee is presently responsible for. On a daily basis, in all those fields, employees must balance the needs of any individual case against the needs of all other current cases as well as their own personal needs.

Concept of Services

The three-sector hypothesis is an economic theory that divides economies into three sectors of activity:

Extraction of raw materials (primary) Manufacturing (secondary)


Services (tertiary).

According to the theory the main focus of an economy's activity shifts from the primary, through the secondary and finally to the tertiary sector. The process is essentially positive, and relates to increase in quality of life, social security, blossoming of education and culture, higher level of qualifications, humanisation of work, and avoidance of unemployment.

Countries with a low per capita income are in an early state of development; the main part of their national income is achieved through production in the primary sector. Countries in a more advanced state of development, with a medium national income, generate their income mostly in the secondary sector. In highly developed countries with a high income, the tertiary sector dominates the total output of the economy.

Service Sector is also known as the tertiary sector of industry is one of the three main industrial categories of a developed economy, the others being the secondary industry (manufacturing), and primary industry (extraction such as mining, agriculture and fishing). Services are defined in conventional economic literature as "intangible goods". According to some economists, the service sector tends to be wealth consuming, whereas manufacturing is wealth producing. Sir Keith Joseph in his lecture Monetarism Is Not Enough, contrasted wealth producing sectors in an economy such as manufacturing with the service sector which tends to be a wealth consuming sector. He contended that an economy declines as its wealth producing sector begins to shrink.

The tertiary sector of industry involves the provision of services to businesses as well as final consumers. Services may involve the transport, distribution and sale of goods from producer to a consumer as may happen in wholesaling and retailing, or may involve the provision of a service, such as in pest control or entertainment. Goods may be transformed in the process of providing a service, as happens in the restaurant industry. However, the focus is on people interacting with people and serving the customer rather than transforming physical goods. Since the 1960s, there has been a substantial shift from the other two industry sectors to the Tertiary Sector in industrialised countries. The service sector consists of the "soft" parts of the economy such as insurance, government, tourism, banking, retail and education. In soft sector employment, people use time to deploy knowledge assets, collaboration assets, and process-engagement to create productivity (effectiveness), performance improvement potential (potential) and sustainability. Typically the output of this time is content (information), service, attention, advice, experiences, and/or discussion (also known as "intangible goods"). Other examples of service sector employment include:

Franchising Restaurants Retailing Entertainment, including the record industry, music industry, radio, television and

movies. News media Leisure industry/hotels Consulting Transport Healthcare/hospitals

Public utilities are often considered part of the tertiary sector as they provide services to people, while creating the utility's infrastructure is often considered part of the secondary sector, even though the same business may be involved in both aspects of the operation.

Goods and services: A Comparative Analysis

Intangibility: The most basic and universally cited, difference between goods and services is intangibility. Because services are performances or actions rather than objects, they cannot be seen, felt, tasted or touched in the same manner that we can sense intangible goods. E.g., health care services are actions (surgery, diagnosis, examination and treatment) performers by providers and directed towards the patients and their families. The services cannot be actually seen or


touched by the patients, although the patient may be able to see or touch the tangible components of the service (e.g. equipment, hospital room)

Intangibility presents several marketing challenges: Services cannot be inventoried, and therefore fluctuations in demand are often difficult to manage. E.g. there is tremendous demand for resort accommodations in phoenix in February, but little demand in July. Yet the resort owners have the same number of rooms to sell year-round. Services cannot be patented legally, and new service concepts can therefore easily be copied by the competitors. Services cannot be readily displayed or easily communicated to the customers, so quality may be difficult for the consumers to assess. Decisions about what to include in advertising and other promotional materials challenging, as is pricing. The actual cost of a “unit of service” is hard to determine and the price-quality relationship is complex.

Heterogeneity: Because services are performances, frequently produced by humans, no 2 services will be precisely alike. Heterogeneity also results because no two customers are precisely alike; each will have unique demands or experience the service in a unique way. Thus, the heterogeneity connected with services is largely the result of human interaction (between and among employees and customers) and all of the vagaries that accompany it.

E.g. a tax accountant may provide a different service experience to two different customers on the same day depending upon their personal needs and personalities.

Because services are heterogeneous across time, organizations and people, ensuring consistent service quality is important. Quality actually depends on many factors that cannot be fully controlled by the service supplier, such as ability of consumer to articulate his needs, willingness & ability of the personnel to satisfy those needs, presence of other consumers and level of demand for the service.

Simultaneous production and consumption: Whereas most goods are produced first, then sold and consumed, most services are sold first and then produced and consumed simultaneously. For example, an automobile can be manufactured in Detroit, shipped to San Francisco, sold 2 months later and consumed over a period of years. But restaurant services cannot be provided until they have been sold, and the dining experience is essentially produced and consumed at the same time. This means that the customer is present while the service is being produced and thus his views are taken in the production process.

Because services are often produced and consumed at the same time, mass production is difficult. The quality of service and customer satisfaction depends on the real time including actions of employees and interaction between employees and customers. It is not possible to gain economies of scale through centralization. If the services are decentralized they can be delivered to the consumer in convenient locations. As the customer is part of the production process, they affect the outcome of the service. A ‘problem’ employee can cause problems for themselves and for others in the service setting leading to lower level satisfaction.

E.g. in a restaurant setting, an over demanding and intoxicated customer will command extra attention of service provider and negatively impact the experiences of other customers.

Perishability: Refers to the fact that services cannot be saved, stored, resold or returned. A seat on an airplane or restaurant not used cannot be reclaimed or used or resold at a later time.

Due to this nature a service cannot be inventoried. Demand forecasting and creative planning for capacity utilization are therefore important. Since services cannot typically be returned or resold it implies strong recovery strategies when things go wrong. E.g. a bad haircut cannot be returned, the customer should have strategies to recover the customers good will if and when such problems occur

Services Marketing

A wide variety of activities labeled as services are practised by both profit-orientated organizations and non-profit orientated organizations. The success of these organizations


depends on delivering excellent service quality and creating value to customers. Defining services is therefore not a simplistic task. Over the years service marketing literature has provided readers with an assortment of service definitions.

According to Irons, pure services are intangible but they do usually add value to, or make available, a tangible product. They do not result in transfer of ownership and may leave only memories.

Zeithaml and Bitner claim that in the simplest terms services are deeds, processes, and performances. Their broader definition states that services include all economic activities whose output is not a physical product, is generally consumed at the time it is produced, and provides added value in forms that are essentially intangible concerns of the purchaser.

Kotler defines service as an activity that one party offers another that is essential intangible and does not result in the ownership of anything. Its production may or may not be tied to a physical product.

Grönroos identifies a service as an activity or series of activities of a more or less intangible nature that normally, but not necessarily, takes place in interaction between the customer and service employees and/or physical resources or goods and/or systems of the service provider, which are provided as solutions to customer problems.

The conclusion derived from the above definition is that services deal with intangible components. The purchase of services does not necessarily result in physical transfer or ownership but still creates a bundle of benefits during or after the service interaction or experience.

Distinguishing between the tangible and intangible components of a service is extremely difficult. Therefore, separating the core service from the augmented service helps to simplify this task. The core service represents the fundamental benefits the service provide to satisfy customers’ needs. The augmented service incorporates the core service in addition to the tangible elements and all additional benefits of the service employed to satisfy customers’ needs. The core services are mostly intangible because of their lack of physical attributes, while augmented services provide the customer with the impression of the services’ tangibility component, because it can be seen, touched, and transferred to the customer.

Salient features of Marketing Services

The inherent differences that exist between goods and services result in unique management challenges for service organizations. Services possess five unique characteristics; namely intangibility, perishability, inseparability, variability, and lack of ownership, that differentiate them from goods.

These characteristics create distinctive challenges for service marketers in attracting new customers, and keeping existing customers. These characteristics are explained in the ensuing sections.

IntangibilityIntangibility is the dominant characteristic of services and is defined as the lack of tangible assets that can be seen, touched or smelled prior to purchase. However, services vary in the degree to which they are intangible and most services include some kind of tangible element.

The tangibility spectrum places highly tangible offerings at one end of the continuum and intangible services on the opposite end of the continuum. It is clear that very few offerings are totally tangible or intangible. The intangible characteristic of services present service marketers with several problems. The lack of physical attributes of services makes it difficult to display or communicate services readily and easily to customers. Customers often find it mentally difficult to grasp the service performance or experience without tangible evidence, which makes it


difficult to diffuse. Services that rely intensely on customer involvement, present cost calculation difficulties that lead to price setting inadequacies for service marketers.

The Tangibility spectrum

These problems can, to a certain extent, be successfully resolved by reducing the intangibility of service offerings through stressing the tangibility components of offerings, stimulating word of mouth communication, creating a strong corporate communicate with customers, and using unique attributable cost and perceived value pricing. Service providers must always take into account the fact that customers use the tangible elements, such as the people who provide the service, the environment in which the service encounter takes place, the equipment used, and the price of the offering, to make assumptions about the quality of the service and to compare it to the offerings of other service providers.

Variability

Variability refers to the unwanted or random variable levels of service quality customers receive when they support an organization. The primary reason for variability is the human element present in the service process, accordingly sustaining the statement of Kotler, that the quality of service depends on the service provider. Because humans normally perform services, the chance of two service performances being the same is highly unlikely.

Different service employees will perform the same service process differently and the same service employee will provide a varying service under different circumstances or at different times. Nevertheless, the recipients of the service are also human, with their own unique demands and expectations of the service performance. Service marketers find it difficult to control the quality of the service performances because it is dependant on fallible employees as one of the main inputs

The reliance on people’s performances causes standardisation service processes to be almost impossible. The intentional or unintentional customisation of service processes and output performances by service employees for individual customers makes promotion of services very difficult.

Customers in general perceive the person who delivers the service “as the service”. As a result, service providers have the ability to alter the outcome and level of customer satisfaction. Service marketers are confronted with the challenge of controlling service quality because consistent quality service performances play a vital role in the survival of organizations. Service quality is profoundly dependent on the ability of customers to articulate their needs and level of service demands. Equally, service quality depends on the ability, and willingness of the service provider


to satisfy customers’ needs and demands. Organizations can put into practice service quality control and measurements by recruiting service-orientated employees and training them to provide a service that will meet or exceed customers’ expectations.

Inseparability

Inseparability refers to the simultaneous production and consumption of a service, thus it is often difficult to separate the service provider from the service performance. Customers are normally present at and during the service performance and play an active role in the service production process. The quality of the service performance is dependent on the interaction between the service provider and the customer.

The customer’s involvement in the production process of the service can influence the outcome of the service positively or negatively. Service marketers must recognize that the roles customers play in the service production process influence the service outcome, not only for themselves but also for other customers. The inter-client interaction between customers also plays an integral part in the outcome of service experiences

Service organizations must acknowledge the influential role that service employees play in service processes. The service employees or the service providers are often seen as the service itself. The inseparability of production and consumption means that very few service offerings can be mass-produced, but almost every service offering can be customised to customers’ needs and demands. Customisation is to the advantage of service organizations, because customers use the degree of customisation of service offerings to measure the quality of services.

PerishabilityPerishability is the inability of a service to be inventoried or stored. This characteristic is of major concern to service marketers because it inevitably leads to supply and demand problems. The capacity lost in services can never be regained and to equalise supply and demand is a difficult task. These distinct service problems present service marketers with the challenge of setting up good recovery strategies for service process failures. Research has shown that resolving customer problems effectively has a powerful impact on customer satisfaction and loyalty. The perishability characteristic of services creates the opportunity for the organization to develop creative planning for capacity utilization and management of future demand.

OwnershipOwnership is the last characteristic of services that distinguish it from goods. Customers receive only the right to a service process when they purchase it. Subsequently it is assumed that payment for services buys only the right of access to a service and not physical transfer of ownership to customers. Customers view the lack of ownership of a service as a perceived risk. Firstly they are presented with the uncertainty as to whether the right service has been obtained and secondly with the uncertainty about the consequences of the service purchase. Since services are produced and consumed simultaneously, the option of “returning” a service does not exist. The inability to own a service also has direct implications on the distribution of services. Service customers usually only have use or access to a facility where a service is performed.

Kotler suggests that services call for special marketing solutions. The characteristics of services create problems for service marketers that are not experienced by product marketers. If these problems are not carefully managed, organizations may experience negative influences on service quality that will ultimately reduce customer retention and organization profits

In this regard, Zeithaml and Bitner have proposed a services marketing triangle that will be discussed in the next section.

Services Marketing Concept

Service marketers face marketing challenges, which revolve around issues such as:• Understanding customers’ needs and expectations of services,• Making services tangible to customers and• Keeping and dealing with promises made to the customers


The services marketing triangle shown in the below figure helps service marketers to address these challenges. The three points of the service triangle represent the organization, the customers, and the employees. Between each of the three points of the triangle different marketing processes such as external marketing, interactive marketing and internal marketing must be successfully carried out for service processes to succeed and to build and maintain relationships with the internal and external customers.

The services marketing triangle

External marketingThe link between an organization and its customers is the external marketing process. External marketing represents the promises that organizations make to their customers with reference to products or services they offer. Organizations make promises to customers concerning their offerings and how delivery of the offerings will be conducted. The external communication activities of the service provider play a key role in the formation of customers’ expectations, because their expectations are affected by the service provider’s direct and indirect marketing messages. In goods as well as services, the traditional marketing activities facilitate external marketing processes. Promises made in advertisements and through promotions are used by customers to form service expectations. These can also positively or negatively influence the customers’ initial expectations of the desired level of service compared to the adequate level of service. Customers use price as an indication of the quality of the offering, while the promise of availability and accessibility of an offering has an impact on the customers’ service expectations.

However, for service organizations, factors such as service employees, organization image and visible structures, and the actual service process itself, form the basis for customers’ expectations of the offering and the delivery thereof. Customers’ expectations and experiences fuse, therefore much of their final belief is drawn from the environment in which they receive the service and the personalities and behaviour of the people they encounter during service processes.

The organization’s projected values and integrity must be the priorities that govern the promises made to the customers during the external marketing process. Customers expect consistent and realistic promises that will at all times be honoured by the organization. Creating unrealistic customer expectations create dissatisfied customers. Misleading customers or over-promising to them can negatively influence the relationship between the organization and the customer.

Interactive marketingThe interactive marketing process is about keeping the promises made by the organization to the customer along with delivering a quality service to the customer. Interactive marketing is the


actual contact between the service employees and the customers and is called the "moment of truth" or service encounter. It is the decisive moment in the service process where organizations actually show what they can do and how they meet the set expectations. At these decisive moments, everything about the service process can succeed or fail. The success or failure can be temporary, complete, or final but the interaction can never be restaged or controlled.

The marketing focus of service organizations has shifted from the offering to the customers, to the interaction that takes place between the service employees and the customers. Through their interactions with employees, customers form a perception of the integrity of an organization’s service promises. They furthermore use the interaction to assess the value of the offering, and to make the decision to purchase or repeat the purchase of an offering. From a customer’s point of view, this is the most important stage of the service delivery process as it is during this process that they receive the value they actually desire. Interactive marketing performs a vital function in the establishment of a relationship between the organization and the customer. The customer’s perception of the service is derived from the delivery of the service, and cannot be separated from the contact they experience with service employees. Therefore, it can be argued that relationships are an inevitable outcome of service delivery. However, it is important for organizations to acknowledge the fact that relationships do not necessarily exist between the organization and the customer, but to a greater extent between the service employees and customers. The success of these relationships depends profoundly on the attitude service employees have towards their employment and their loyalty towards the organization. It is the responsibility of the organization to recruit service-orientated employees very carefully, involve them in organization activities, and motivate them to follow the examples set by the leaders of the organization

During interaction, employees and customers meet face to face and the actions of service employees will be a major factor in influencing the customers’ expectations of the service. Customers’ evaluation of services is based on their interaction with service employees, therefore it is of the utmost importance that service organizations continuously strive to improve the quality of interactions. People forget how fast you performed a service but they remember how well you did it. Service organizations must therefore ensure that their service employees have the skills and ability to perform the service to meet the customers’ expectations. The reliability of services is tested every time a customer interacts with the employees and the service provider whom they represent.

Internal marketingThe marketing process that enables service marketers to deliver promises to customers is called internal marketing. Through internal marketing, the organization reveals that it consists of individuals and departments who are considered to be each other’s customers. Employees do not only provide a service to the external customers but also to each other within the organization. Promises are easy to make, but unless organizations have internal systems in place to ensure the delivery thereof, service processes cannot succeed. The success of internal service systems is dependent on the relationship between the organization and the employees.

Internal marketing hinges on the assumption that employee satisfaction and customer satisfaction are interlinked, thus internal marketing must precede external marketing. Organizations whose objective is to deliver constant high service quality have to enable all employees to practice customer orientation and marketing. Service organizations must recognize that achieving objectives and creating change can only be achieved through employees. Service providers need to recruit, train, and provide tools to employees to perform superior service. People are valuable assets to an organization. They should therefore be fully equipped to provide the best service to the external and internal customers. Employees who understand their functions within the organization are more likely to create a harmonious work environment that will pave the way for less role ambiguity, less conflict, and more satisfied employees in the workplace.

The examples set by management for their employees are critical factors for the success of the internal marketing process. There is a direct link between internal marketing and the actual delivery of the service, because customers believe that “what you are is what matters not what you say”.


The success of services relies on the three marketing activities to be carried out successfully and to be aligned with each other. Each of the activities presents a challenge and it is important to find strategies that support them all. Successful external relationships will be repeated internally.

Why Marketing of ServicesIt is obvious that the growth in the services sector has been substantive. Households as well as firms are demanding more services as well as services of increasing quality and sophistication. There are number of reasons for this growth in the service sector as mentioned below:

Greater affluence:With the increasing affluence of people resulting from the growth of economies there has been a greater desire for Quality life. Consumers are willing to spend more on leisure resulting in greater demand for recreation and entertainment facilities, tourist resorts and other hospitality services. Also, there has been a tendency on externalization of services production from households to the formal economy. Demand for services like interior decoration, laundry, care of household products etc. has increased which consumers used to perform themselves earlier. Also, with increased incomes, there has been a greater demand for financial services.

Leisure time: - People do get some time to travel and holiday and therefore there is a need for travel agencies, resorts, hotels, and entertainment. There are others who would like to utilize this time to improve their career prospects and therefore there is a need for adult education/distance learning/part time courses.

Working women:As more and more women have started working, the time has become most scarce commodity in family life. This has led to more demand for crèches, baby-sitting, household domestic help etc. Further, working women and the resulting two income households have created greater demand for, certain services like retailing, real estate and personal finance services

Greater life expectancy:The economic growth and increasing standard of living have also resulted in the greater life expectancy and thereby an expanding old age population. Thus there is an increased need for services like old age homes, nursing homes, healthcare centers, etc.

Greater complexity of products:With rapid development in technology, the consumer today uses a lot of complex products in his day-to-day life. Thus there is a greater demand for specialists who provide maintenance and upkeep of such products like cars, home computers, household appliances etc.

Increased complexity of life:The greater complexity of life has created demand for a wide range of services, especially legal and financial advice. The number of specialists in income tax, labor laws, legal affairs, marriage counseling, employment services etc. has been increasing.

Globalization Globalization of economies has led to an increased demand of communication, travel and information services. Also there has been an increased and new demand on legal and other professional services.

Resource scarcity and ecology: - As the natural resources are depleting and need for conservation is increasing, we have seen the coming up of service providers like pollution control agencies, car, pools, water management, etc.

New products: - the development in information technology has given rise to services like PCOs, Pager service providers, Web Shoppe, etc

While the role of agriculture has been reducing in the economies of industrial societies that of service sector has been increasing at a fast pace. Thus, as the economies shift from developing to developed economies the, they show more and more shift towards services.


Behaviourial Profile of Users

The first commandment of marketing is to know they market which draws our attention on understanding the behavioural profile of buyers. Buyer's behaviour is viewed as an orderly process whereby an individual interacts with his/her environment for the purpose of making marketplace decisions on products and services. The decision process used by the users of services moves through different stages, e.g. recognition of problem, search for information, evaluation of information, purchase decisions and post purchase evaluation. At the market place, an individual's specific behaviour is governed by internal factors like need, motives, perception and attitudes as well as by external factors or environmental influences, such as the family, social groups, cultural, economic and business influences.18 C. Glenn Walters in his important contribution on consumer behaviour has shown the environmental and individual influences in a circle.19 The environmental and culture influences as shown in Figure 1.1 make it clear that the purchase strategy is influenced by a number of factors and an in-depth study of these influences are essential to understand the behavioural profile of users.

Environmental and Cultural Influences.

The formal explanation of buyer behaviour has been initiated by the economists since their studies of income and personal consumption and the concept of discretionary income are found helpful in comprehending the behaviour of users. The economic theory describes man as a rational buyer who has complete information about the market and uses it to obtain optimum value for his buying efforts and money. In this context, we find price as an effective motivational force. The economists feel that markets are homogeneous. They advocate that heterogeneity not homogeneity characterises markets. Another way to explain buying behaviour is in terms of what the buyers are trying to do.

The Sorting Theory explains different stages starting from conglomerations, going through the various types of sorting and concluding with assortments.

This also conveys that the consumer enters the market as a problem solver.20 The economic theories explain competition among sellers by emphasising innovative competition, product differentiation and differential advantage, it is advocated that each item is differentiated from all others by the characteristics of its products, its services, its geographic location or its particular combination of all these features. It is against this background that the survival of a firm depends upon its efforts for offering differential advantages over other firms. The goods manufacturing or the services generating organisations found successful in establishing distinction are found successful in getting a positive response. )

There are a number of economic factors influencing consumers or users while spending their incomes for personal consumption, e.g. disposable personal income, size of family and family income, expectations of consumers, liquid assets of consumers and consumer credit. We can't ignore the fact that goods as well as the services are produced for consumption. The transformation of production into consumption is substantially governed by the purchasing


power and the disposable income which represents for the potential purchasing power in the hands of consumers. It is clear that the income after discharging the tax liability is called the disposable income.

The social scientists view marketing as involving the activities of groups of people motivated by group pressures as well as by individual desires. The significance of reference groups, individual's concept of social role, the diffusion process and social classes are found instrumental in influencing the human behaviour. The studies made by them have demonstrated the importance of social factors in anatomising and influencing the consumer behaviour.

The cultural-anthropological influences are also found significant while studying the consumer behaviour. Every culture evolves unique patterns of social conduct. As for instance, the Japanese culture provides for certain pattern of eating, dress and hair styles and social interactions. The American culture provides for different patterns. And both are found different from those prevalent in the Indian culture. In the USA, again we find different patterns. It is said that many aspects of American culture and subcultures within the US are unique, including the role of ethnic groups, religion, influence of women in society, leisure hour and fashion as well as the composition of population iteself. There are a number of factors included in the cultural influences like religion, ethnic groups, role of women, leisure time and fashion and a study of behavioural profile which necessitates an indepth study of all.

The psychologists have discussed the psychological influences. They study attitudes and learning for understanding the consumer behaviour. Concepts borrowed from the learning theory help in answering a number of questions as mentioned below.

How do consumers learn about products offered for sale? How do they learn to recognise and recall these products? By what processes they do develop buying or consuming habits?

The aforesaid facts make it clear that economic, social, psychological factors help us in understanding the behaviour of buyers. It is important to mention that an in-depth study of the behavioural profile requires a sound management of information and for which we need support of sophisticated information technologies. This makes it significant that the service generating organisations assign due weightage to the marketing information system. Understanding human behaviour is, of course, a difficult task., We find lifestyle a distinct mode of living in a dynamic society. The lifestyle research measures help us in understanding the interests of buyers, their opinions and certain basic demographic characteristics.22 The lifestyle research answers to a number of questions like

What do women think of the job of housekeeping? Do they participate in the community activities? Are they interested in the future?

It is right to mention that lifestyle segmentation is related to people rather than products. It classifies them into different lifestyle groups naturally each with a unique style of living. The justification for the lifestyle approach is that consumer is not interested in the product per se or by himself but in its effect upon himself. We accept the fact that recently the lifestyle segmentation has provided a more global look at the behaviour of buyers.

Of course, the aforesaid factors help us in understanding the behaviour of buyers however the study of human behaviour is found a tough task. The task is much more difficult when we are required to study the behaviour of buyers. It is right to say that a picture cut into different pieces can't be set right unless the missing piece is available. This makes it clear that a number of factors influence the behaviour of buyers and in the process of study, it is natural that we often commit a mistake. Thus dealing with a diverse, obscure and complex personality requires more professionalism. To be more specific in the marketing of services where we find the users enigmatic; it is essential that we make possible an in-depth study of the different factors directly or indirectly influencing the behavioural profile of buyers.


Marketing Information Systems

Introduction

We are living in an age of information technologies in which a sound management of information plays an incremental role in improving the quality of managerial decisions. The mounting intensity of competition makes it essential that we make possible frequency in the process of innovating the decisions so that our task of making things happen is simplified considerably. It is in this context that we talk about the instrumentality of information-based decisions in making the marketing processes proactive. Almost all the organisations either producing goods or generating services need to manage information in a right fashion. Of late, we have sophisticated information technologies and the professionals bear the responsibility of managing the marketing information system.

It is essential that the service generating organisations are well aware of the recent developments in and around the business and formulate policies and decisions which cater to the changing needs. If the banking organisations are not familiar with the latest developments in the economic environmental conditions, the requirements of business and industries, the expectations of different categories of customers; the task of making sensitive policy decisions would be difficult. If the hotels and tourism organisations are not aware of the emerging tends in the tourism industry vis-à-vis the expectations of potential tourists and guests; the policy decisions would show a lukewarm response. Like this, the personal care service generating organisations are supposed to enrich their knowledge bank, specially regarding the requirements of the potential customers failing which we find their task difficult. These facts are a mute testimony to this proposition that by and large almost all the organisations need to manage the marketing information and it is against this background that we make an advocacy in favour of developing a technology-driven marketing information system.

The main purpose of marketing information system is to make possible coordinated, systematic and continuous collection of information. It is an organised set of procedures, information-handling routines and reporting techniques designed to provide the information required for making marketing decisions. It reduces the domination of intution based decisions as relevant and useful information from both the internal and external sources are collected. Further it also provides a mechanism for reducing the often overwhelming flood of available marketing information to pertinent usable amounts. The responsibility for an effective MIS rests with the system analysts who are found highly skilled in information-gathering and information-handling techniques. An advisory group make up of representative from marketing, finance and accounting, operation research, data processing and other organisational units not only assist a system analyst but also maintains continual surveillance over the MIS, suggests modifications to meet the company's evolving marketing information needs and the initial design.

It is important to mention that the identification of desired information outputs is the most critical aspect of MIS design. Essentially, system designer is required to focus on the nature of decisions required for combating the marketing problems. The job of MIS is to process large quantities of marketing data and to present it to management in the most usable form effective for decision making. A sophisticated processor computer is required for the handling of data. The processor is controlled by a data bank, a statistical bank and a model bank. The real challenge in designing an MIS is to determine what kind of and how much information is how often needed by each executive in the marketing organisation.

The MIS information inputs come form diverse sources, both within and outside the organisation. The internal sources provide the major information flows, found routine or of continuous nature e.g., the controller, research and development department. These sources provide for operating and sales analysis data. The external sources provide three forms of marketing information, e.g. marketing intelligence, marketing forecasts and marketing research.In making the marketing decisions, the operating data has been found significant. The marketing executives use such data almost daily which help them in identifying problems, developing alternatives, appraising them and deciding courses of action. The sources of operating data are company's own financial, accounting, sales and production records. The sales analysis data is also an important operating data. Analysis of a company's sales records makes it possible to detect various marketing strengths and weaknesses. In the context of external sources, we find


marketing intelligence important which is considered to be an organised procedure to collect regularly from diverse sources the information of potential usefulness for the making of marketing decisions. It includes raw data, summary statistics, qualitative inferences, expert and lay opinions, impressions and albeit rumours. In this context, a majority of the items are collected from the public sources. Another important source is sales forecasting. It is an estimate of sale tied to a particular marketing programme and assuming a particular set of economic and other forces outside the forecasting unit. The forecast may be both, sophisticated and unsophisticated. Naturally, the sophisticated forecasts have greater accuracy in their performance,. Regression analysis and econometric model building are the two most widely used methods, however the third one is also used which is the survey of consumers' buying power. The unsophisticated methods are jury of executive opinion, poll of sales force opinion and

It is important to mention that an MIS is made of different subsystems. If a system has to aid in decision making, it is essential that the system analysts are well aware of the nature of information needed. Hence, the decision makers are required to speak of the nature of information required by them. This helps decision makers in thinking through the decision process in great detail which simplifies the task of system analysts.

Assembling of data, processing of data, analysis of data, storage of data, evaluation of data and the dissemination of data are the different functions of the MIS as shown in the Figure. The richness of data bank is an important consideration which requires due attention on the collection of information. The availability of sophisticated information technologies is also significant to influence the accuracy and time in managing the information. The quality of compute professionals also influences the process considerably. The senior executive; working in an organisation are required to assign due weightage to the development and management of the system. If the organisations have been found managing the information with the help of new generation of information technologies, we find its immediate effect on the quality of decision. It is important to mention that of late we also find micro computers assisting executives in making the decisions. Thus in the years to come we expect new developments in the discipline which would make it essential that the services generating organisation -assign an overriding priority to the development of an MIS.

A marketing information system (MIS) is intended to bring together disparate items of data into a coherent body of information. An MIS is, as will shortly be seen, more than raw data or information suitable for the purposes of decision making. An MIS also provides methods for interpreting the information the MIS provides. Moreover, as Kotler's1 definition says, an MIS is more than a system of data collection or a set of information technologies:

"A marketing information system is a continuing and interacting structure of people, equipment and procedures to gather, sort, analyse, evaluate, and distribute pertinent, timely and accurate information for use by marketing decision makers to improve their marketing planning, implementation, and control".

The figure illustrates the major components of an MIS, the environmental factors monitored by the system and the types of marketing decision which the MIS seeks to underpin.


The explanation of this model of an MIS begins with a description of each of its four main constituent parts: the internal reporting systems, marketing research system, marketing intelligence system and marketing models. It is suggested that whilst the MIS varies in its degree of sophistication - with many in the industrialised countries being computerised and few in the developing countries being so - a fully fledged MIS should have these components, the methods (and technologies) of collection, storing, retrieving and processing data notwithstanding.

Internal reporting systems: All enterprises which have been in operation for any period of time nave a wealth of information. However, this information often remains under-utilised because it is compartmentalised, either in the form of an individual entrepreneur or in the functional departments of larger businesses. That is, information is usually categorised according to its nature so that there are, for example, financial, production, manpower, marketing, stockholding and logistical data. Often the entrepreneur, or various personnel working in the functional departments holding these pieces of data, do not see how it could help decision makers in other functional areas. Similarly, decision makers can fail to appreciate how information from other functional areas might help them and therefore do not request it.

The internal records that are of immediate value to marketing decisions are: orders received, stockholdings and sales invoices. These are but a few of the internal records that can be used by marketing managers, but even this small set of records is capable of generating a great deal of information. Below, is a list of some of the information that can be derived from sales invoices.

· Product type, size and pack type by territory· Product type, size and pack type by type of account· Product type, size and pack type by industry· Product type, size and pack type by customer· Average value and/or volume of sale by territory· Average value and/or volume of sale by type of account· Average value and/or volume of sale by industry· Average value and/or volume of sale by sales person

By comparing orders received with invoices an enterprise can establish the extent to which it is providing an acceptable level of customer service. In the same way, comparing stockholding records with orders received helps an enterprise ascertain whether its stocks are in line with current demand patterns.

Marketing research systems: The general topic of marketing research has been the prime ' subject of the textbook and only a little more needs to be added here. Marketing research is a proactive search for information. That is, the enterprise which commissions these studies does so to solve a perceived marketing problem. In many cases, data is collected in a purposeful way to address a well-defined problem (or a problem which can be defined and solved within the course of the study). The other form of marketing research centres not around a specific marketing problem but is an attempt to continuously monitor the marketing environment. These monitoring or tracking exercises are continuous marketing research studies, often involving panels of farmers,


consumers or distributors from which the same data is collected at regular intervals. Whilst the ad hoc study and continuous marketing research differs in the orientation, yet they are both proactive.

Marketing intelligence systems: Whereas marketing research is focused, market intelligence is not. A marketing intelligence system is a set of procedures and data sources used by marketing managers to sift information from the environment that they can use in their decision making. This scanning of the economic and business environment can be undertaken in a variety of ways, including2

Unfocused scanning The manager, by virtue of what he/she reads, hears and watches exposes him/herself to information that may prove useful. Whilst the behaviour is unfocused and the manager has no specific purpose in mind, it is not unintentional Semi-focused scanning Again, the manager is not in search of particular pieces of information that he/she is actively searching but does narrow the range of media that is scanned. For instance, the manager may focus more on economic and business publications, broadcasts etc. and pay less attention to political, scientific or technological media. Informal search This describes the situation where a fairly limited and unstructured attempt is made to obtain information for a specific purpose. For example, the marketing manager of a firm considering entering the business of importing frozen fish from a neighbouring country may make informal inquiries as to prices and demand levels of frozen and fresh fish. There would be little structure to this search with the manager making inquiries with traders he/she happens to encounter as well as with other ad hoc contacts in ministries, international aid agencies, with trade associations, importers/exporters etc. Formal search This is a purposeful search after information in some systematic way. The information will be required to address a specific issue. Whilst this sort of activity may seem to share the characteristics of marketing research it is carried out by the manager him/herself rather than a professional researcher. Moreover, the scope of the search is likely to be narrow in scope and far less intensive than marketing research Marketing intelligence is the province of entrepreneurs and senior managers within an agribusiness. It involves them in scanning newspaper trade magazines, business journals and reports, economic forecasts and other media. In addition it involves management in talking to producers, suppliers and customers, as well as to competitors. Nonetheless, it is a largely informal process of observing and conversing.

Some enterprises will approach marketing intelligence gathering in a more deliberate fashion and will train its sales force, after-sales personnel and district/area managers to take cognisance of competitors' actions, customer complaints and requests and distributor problems. Enterprises with vision will also encourage intermediaries, such as collectors, retailers, traders and other middlemen to be proactive in conveying market intelligence back to them.

Marketing models: Within the MIS there has to be the means of interpreting information in order to give direction to decision. These models may be computerised or may not. Typical tools are:

· Time series sales modes· Brand switching models· Linear programming· Elasticity models (price, incomes, demand, supply, etc.)· Regression and correlation models· Analysis of Variance (ANOVA) models· Sensitivity analysis· Discounted cash flow· Spreadsheet 'what if models


These and similar mathematical, statistical, econometric and financial models are the analytical subsystem of the MIS. A relatively modest investment in a desktop computer is enough to allow an enterprise to automate the analysis of its data. Some of the models used are stochastic, i.e. those containing a probabilistic element whereas others are deterministic models where chance plays no part. Brand switching models are stochastic since these express brand choices in probabilities whereas linear programming is deterministic in that the relationships between variables are expressed in exact mathematical terms.

Significance of Services Marketing

The services sector if marketed in a right fashion contributes substantially to the process of development. The speed of socio-economic transformation can be increased sizeably if the innovative marketing principles are practised. We can't deny the fact that in the years to come the services sector would get a conducive environment with profitable opportunities. If we market the services in a right direction, the available opportunities can be capitalised on optimally. It is against this background that we make an advocacy in favour of services marketing. The following facts are a staunch testimony to this proposition that an optimal development of the services sector would pave copious avenues for the development of national economy.

1. Creation and expansion of job opportunities: The mounting problem of unemployment specially in the Indian perspective makes it essential that whatever the development plans we formulate are instrumental in creating and expanding the job opportunities. We can't deny that the development of services sector would open doors, search new vistas for the development of even those sectors which have either remained untapped or have partially been tapped. If we turn our eyes on the different components of the services sector, such as personal care services, education services, medicare services, communication services, tourism services, hospitality services, banking services, insurance services, transportation services, consultancy services and even other services; the existing conditions compel us to think that an organised and a systematic development would create tremendous job opportunities. It is also right to mention that marketing practices would play an incremental role in making the organisations commercially viable which would signal positive developments in the national economy. It is important to mention that in the Indian context, we have not been successful in tapping the potentials of the services sector since in the USA more than 85 per cent of job opportunities come from the services sector. This confirm the significance of services sector to the creation of job opportunities. Our prime attention on raising the contribution of the services sector to the GNP or the national economy would establish a new circle of development which would invite multi-faceted positive developments.

2. An Optimal Utilisation of Resources: The most important thing in the development process is to make possible an optimal development of the different types of resources available in a country. Since we have been facing the problem of a non-optimal demographic structure, it is pertinent that we make an assault on the misuse of resources. It is in this context that we find the(services marketing important since this sector of the economy if marketed properly regulates the unproductive use of resources. By marketing services, we prefer to use resources which remain unutilised or underutilised generally found to be a burden on the exchequer. The personal care services, the entertainment services, tourism services, hotel services help developing the economy without consuming the natural resources. It is high time that the policy planners realise gravity of the situation and regulate the non-optimal use of natural resources so that we don't complicate the magnitude of problem for the coming generations. To be more specific in an over-populated country, it is much more impact generating that the development policies assign due weightage to the conservation of natural resources. Of course, the services marketing simplify our task of conserving the valuable natural resources for the coming generations.

3. Paving avenues for the formation of capital: To energise the process of development, it is essential that we speed up the process of capital formation so that the problem of inadequacy of financial resources is minimised. It is against this background that we need to assign due weightage to the development of services sector. The formation of capital is substantially influenced by the contributions of production proceses to the national economy. If our investments are found to be productive, we contribute substantially to the development process.


The increasing GNP paves avenues for the development of income which opens doors for investment. For accelerating the rate of capital formation, it is essential that we explore opportunities and identify important or the profitable services. It is also significant that we keep in mind the potentials available and plan accordingly. It is important to mention that in the economy of US, an individual spends about 49 per cent of a dollar on service. This makes the development conditions favourable and investment opportunities are capitalised on profitably. An important task before the development planners is to raise the contribution of GNP to the national economy which is even below 40 per cent in the Indian context. It is a crying need of the hour that the development planners make sincere efforts to accelerate the rate of capital formation and the services sector would not disappoint them.

4. Increasing the standard of living: The philosophy of development is coiled in the essence of improving the living conditions of masses which in turn help increasing the standard of living. If we offer quality living conditions for the masses, the faculty of development would be proved to be productive. The qualitative developments in the society are substantially influenced by the pattern or system of development adopted by the policy makers. If we turn our eyes on the standard of living of the Indian society, of course we find ourselves far behind the developed countries. At the same time, it is right to mention that we find good auguries and are optimistic. For increasing the standard of living, it is only not essential that we make available to the masses opportunities to earn more but it is also essential that we make sincere efforts to increase public awareness so that they know how to spend, where to spend, what to eat, how much to eat, how to develop our personality, how to keep the health sound and so on. These things contribute considerably to the standard of living. It is right to mention that with an increase in the standard of living, we succeed in enriching the potentials of human resources. The development of service generating organisations inform and sense the customers in a right fashion.

5. Environment-friendly technology: Of late, we find use of technologies even in the services sector since almost all the services are now found technology-driven. To be more specific the developed countries have been found practising the same. There is no doubt in it that we find a beginning even in the Indian condition but it is at the nascent stage. The basic difference that we find in the nature and types of technologies used for managing and offering the services is its negligible or even dismal negative effective on the environment. The banking services, insurance services, tourism services, hostel services, communication services, education services and by and large almost all the services are now technology-driven but environment friendly. If we talk about the technologies used for manufacturing organisations, the harmful effects on environment can't be negated. This makes it clear that technology-driven service generating organisations offer world class services even without polluting the environment.

Emerging Key Services

As economy shifts from developing to developed stage, they will show more and more shift toward services

Today, the fastest growing segments of the US economy is services In 1948 54% of the GDP of US was generated by services which is 80% now Employment in this sector which was 55% in 1950 is now 83% The US balance of trade in goods has remained in the red for many years, but there has

been a trade surplus in services Today service sector dominates the economics of many developed nations. As countries develop the role of agriculture in the economy declines and that of services increase. (China has 50% GDP from service, 35% from industry, and 15%from agriculture). During recession it has been seen that service output declines less than industrial output – the service employment is less sensitive to business cycle fluctuation. Globalisation as strategy for service firm is becoming more important

INDIAN SCENARIO The service sector now accounts for more than half of India's GDP: 51.16 per cent in

1998-99. This sector has gained at the expense of both the agricultural and industrial sectors through the 1990s. The rise in the service sector's share in GDP marks a structural shift in the Indian economy and takes it closer to the fundamentals of a developed


economy (in the developed economies, the industrial and service sectors contribute a major share in GDP while agriculture accounts for a relatively lower share).

The service sector's share has grown from 43.69 per cent in 1990-91 to 51.16 per cent in 1998-99. In contrast, the industrial sector's share in GDP has declined from 25.38 per cent to 22.01 per cent in 1990-91 and 1998-99 respectively. The agricultural sector's share has fallen from 30.93 per cent to 26.83 per cent in the respective years.

Some economists caution that if the service sector bypasses the industrial sector, economic growth can be distorted. They say that service sector growth must be supported by proportionate growth of the industrial sector; otherwise the service sector grown will not be sustainable. It is true that, in India, the service sector's contribution in GDP has sharply risen and that of industry has fallen (as shown above). But, it is equally true that the industrial sector too has grown, and grown quite impressively through the 1990s (except in 1998-99). Three times between 1993-94 and 1998-99, industry surpassed the growth rate of GDP. Thus, the service sector has grown at a higher rate than industry that too has grown more or less in tandem. The rise of the service sector therefore does not distort the economy.

The share of agriculture sector to GDP has come down from 50% in 1960 to 24% Service sector contribution to GDP is around 54% with an annual growth of 8% Employment in this sector is around 50% The response to liberalization has been more in service sector, partly because lower fixed

investment requirements, example:- today’s concept of banking Technological advances have made it possible for India to compete on global basis in

areas like SOFTWARE, IT, HEALTH, EDUCATION, etc., In addition lower wage structure has helped to develop CALL CENTRES, MEDICAL TRANSCRIPTION, etc., From 1996 BSE has given a prominent place to service industry in its 30-share index Since no tax is imposed on agriculture sector, most of the tax came from manufacturing

sector. Now services are being taxed Service tax collection is to the tune of 5000 crore. 83% of this is contributed by service

sectors. 51% -Telecom, others are Insurance, AD agencies, Courier and stockbrokers. Many export benefits like EPCG is now extended to the service sector. In last 25 years the increase in employment in the organized sector is 57% while if only

service sector is considered it is 70%(other than service sector it 41%) India’s service exports in1997 were 9.3 billion $ against its merchandized exports of

$32.2 billion. It is expected that service exports could a third of merchandize exports now this will be well above the global average of ¼. It implies that India which has failed to catch the bus in the exports of manufactures is among the early leaders of the developing world in the race for service exports.

Within the services sector, the share of trade, hotels and restaurants increased from 12.52 per cent in 1990-91 to 15.68 per cent in 1998-99. The share of transport, storage and communications has grown from 5.26 per cent to 7.61 per cent in the years under reference. The share of construction has remained nearly the same during the period while that of financing, insurance, real estate and business services has risen from 10.22 per cent to 11.44 per cent.

The fact that the service sector now accounts for more than half the GDP probably marks a watershed in the evolution of the Indian economy.

Following are the sectors where service marketing has emerged.

Banking Insurance Mutual Funds Tourism industry Telecommunication Education Hospitals Couriers Automobile


Building Services Aspiration

Introduction

Aspirations make the ways for the generation of demand. Aspirations pave the avenues for the offering of quality services to the users. If we talk about the service aspirations of organisations engaged in generating the services, our emphasis is on the offering of quality services. And when we make an advocacy in favour of the service aspirations of users, our focus is on the creation of demand, expansion of market and tapping of the market potentials. The service generating organisations while formulating strategies need to build service aspirations - that the process of demand generation gains momentum. It is not only sufficient that they formulate a sound marketing plan. It is much more impact generating that they build up service aspirations so that the employees engaged in tiering the services make available the users the promised services. As and when have find a gap between the services-promised and services-offered, it is due mainly to the lukewarm efforts of the service generating organisations while building r service aspirations. The stagnation in demand is also influenced by the same because the prospects stop thinking about the services regarding which the :organisations evince least interest in translating the aspirations into demand. It is against this background that we find it significant to focus on the service aspirations. The professionals working in an organisation bear the responsibility of building the service aspirations. We can't negate the fact that with the development of corporate sector and a strong emphasis on the services sector, it is high time that the service generating organisations make sincere efforts to mild up services aspirations.

At the outset, we talk about the service aspirations of an organisation where the employees engaged in offering the services are supposed to work with the it: of offering quality services to the users. In a majority of the cases we find the policy makers promise the services and make a provision for the world ifs services but due mainly to the lack of employee-orientation vis-à-vis the culture, a gap between the services-promised and services-offered remains :

The employees serving an organisation lack training; the policymakers in IT. initiating employee-orientation and resulting from which the promised ices never reach to the users. If the employees are not interested in serving r users, this is due to the fact that the policy makers vis-à-vis the professionals not assigned due weightage to the development and motivation of human resources. The training facilities are inadequate, the policy decisions are not and the professionals are found disinterested. The building of service aspirations requires employee-orientation. If the employees are imparted proper training facilities; if they are motivated reason find employee-orientation which engineers a sound foundation for server users. Performance-orientation necessitates employee-orientation and employee-orientation requires proper training and adequate incentives. If the line staff are not working properly; if they are deliberate in creating problems because of deficient management and faulty policy decisions.

The professionals if evince interests in switching on the process, the task is not much more difficult. The banks and other agencies have been issuing credit cards. The services aspirations at the end of an organisation are well managed because the employees are found promoting the same. Here it is important that the professionals sensitise prospects in a right fashion so that they aspire for using the credit cards. The market for cellular phone is not capitalised on optimally due to the fact that the service generating organisations fail in sensitising the prospects for aspiring the use of cell phone. This speaks of the fact that building of service aspirations at the users' end is also significant.

Steps in building service aspiration

Step 1: Identify the Service Process to Be Blueprinted. Blueprints can be developed at a variety of levels, and there needs to be agreement on the starting point. For example, the express mail blueprint shown earlier is at the basic service concept level. Little detail is shown, and variations based on market segment or specific services are not shown. Specific blueprints could be developed for two-day express mail, large accounts, Internet-facilitated services, and/or store-front drop-off centers. Each of these blueprints would share some features with the concept blueprint but would also include unique features. Or if the "sort packages" and "loading" elements of the process were found to be problem areas or bottlenecks that were slowing service to customers, a detailed blueprint of the sub processes at work in those two steps could be


developed. Identifying the process to be mapped will be determined by the underlying purpose for building the blueprint in the first place.

Step 2; Identify the Customer or Customer Segment Experiencing the Service. A common rationale for market segmentation is that each segment's needs are different and therefore will require variations in the service or product features. Thus, blue prints are most useful when developed for a particular customer or customer segment, assuming that the service process varies across segments. At a very abstract or conceptual level it may be possible to combine customer segments on one blueprint. However, once almost any level of detail is reached, separate blueprints should be developed to avoid confusion and maximize their usefulness.

Step 3: Map the Service Process from the Customer's Point of View. This step involves charting the choices and actions that the customer performs or experiences in purchasing, consuming, and evaluating the service. Identifying the service from the customer's point of view first will help to avoid focusing on processes and steps that have no customer impact. This step forces agreement-on who the customer is (sometimes no small task) and may involve considerable research to determine exactly how the customer experiences the service. In mapping the Margaret River Masters surfing event in Australia, researchers used a team of participant observers who involved themselves in the event while recording details about each stage and encounter in the total experience. These detailed observations,, combined with customer surveys, allowed them to identify the important actions and activities of this unique event from a customer's point of view. The blueprint was then used to identify points for improvement in this competitive event that attracts the world's best surfers.

Sometimes the beginning and ending of the service from the customer's point of view may not be obvious. For example, research in a hair-cutting context revealed that customers viewed the process as beginning with the phone call to the salon and setting of the appointment, whereas the hair stylists did not typically view the making of appointments as part of the service process.34 Similarly, in a mammography screening service, patients viewed driving to the clinic, parking, and locating the screening office as part of the service experience. If the blueprint is being developed for an existing service, it may be helpful at this point in the process to videotape or photograph the service process from the customer's point of view. Often managers and others who are not on the front lines do not actually know what the customers are experiencing and what it all looks like from their points of view.

Step 4: Map Contact Employee Actions, Both Onstage and Backstage, and/or Technology Actions. First the lines of interaction and visibility are drawn, and then the process from the customer contact person's point of view is mapped, distinguishing visible or onstage activities from invisible backstage activities. For existing services this will involve questioning front-line operations employees to learn what they do and which activities are performed in full view of the customer versus which activities are carried out behind the scenes.

In the case of technology-delivered services or those that combine technology and human delivery, the required actions of the technology interface will be mapped above the line of visibility as well. If no employees are involved in the service at all, then the area can be relabeled "onstage technology actions." If there are both human and technology interactions, those activities can be separated by an additional horizontal line to separate "onstage contact employee actions" from "onstage technology actions." Using the additional line will facilitate reading and interpretation of the service blueprint.

Step 5: Link Contact Activities to Needed Support Functions. The line of internal interaction can then be drawn and linkages from contact activities to internal support functions can be identified. It is in this process that the direct and indirect impact of internal actions on customers becomes apparent. Internal service processes take on added importance when viewed in connection with their link to the customer. Alternatively, certain steps in the process may be viewed as unnecessary if there is no clear link to the customer's experience or to an essential internal support service.

Step 6: Add Evidence of Service at Each Customer Action Step. Finally, the evidence of service can be added to the blueprint to illustrate what it is that the customer sees and receives as tangible evidence of the service at each step in the customer experience. The photographic blueprint including photos, slides, or video of the process can be very useful at this stage as well


to aid in analyzing the impact of tangible evidence and its consistency with the overall strategy and service positioning.

Services marketing mix - the 7 Ps (The concept)

The traditional marketing mix is the most basic concept in marketing and is defined as elements which organizations control and use to satisfy or communicate with customers. The components of the traditional marketing mix are the four P’s: product, price, place, and promotion. Careful management of these components is essential for the successful marketing of goods and services in both long-term and short-term marketing strategies of organizations. Conversely, the traditional marketing mix components have been found to be too limited in their application of services.

The intangibility of service offerings is not taken into consideration because the focus is on the tangibility of products. The price component overlooks the fact that many services are produced without a price being charged to the final customers, and customers frequently use price as an indication of service quality. Equally, the simultaneous production and consumption of service offerings make the distribution component difficult to implement and control. While the promotion component of the traditional marketing mix concerns itself with advertising, sales promotions and publicity, services marketing involves service employees and customers in the real time marketing of services during the interaction process. The limitations of the traditional marketing mix have lead to exploitation by service marketers of additional components that services can utilise to satisfy and communicate with customers, resulting in the adoption of the service mix.

The elements off this new concept are: 1. Service offerings (product)2. Price3. Distribution (place)4. Promotions5. People6. Physical evidence7. Processes.

The three new components address the uniqueness of three of the service characteristics. They focus, firstly, on the inseparability of service marketers from customers, secondly, on the inability to hold service in inventory which makes it critical for the service process to flow smoothly and lastly, on the fact that a highly intangible service offering must appear tangible The additional components of the service mix can be fully controlled by the service organization and play a vital role in ensuring that marketing is customer focused, not product. The ensuing sections will provide a detailed description of the service mix.

Service offerings (Product)

A product is anything that an organization offers to customers that might satisfy a need, whether it is tangible or intangible. In contrast, the decisions that face service marketers concerning service offerings are very different from those related to goods. An analysis of service offerings shows that it can be divided it into two distinct components namely:

A core service offering that represents the intangible core benefits of services A secondary service offering that represents the tangible and augmented elements of the

service offerings.

The core service offerings are developed with customers’ benefit in mind and place the emphasis on the customers’ perception of services. The secondary service offerings illustrate the additional benefits that the service offers to meet customers’ additional needs, and serve to differentiate the offerings from those of competitors’. These benefits can combine both the tangible and intangible elements of service offerings that facilitate the customer to comprehend the core service.


Because of its intangibility, services are difficult to control and display to customers. Consequently, service marketers often emphasise the tangible elements of service offerings. The more intangible a service, the greater is the need for tangible evidence. Tangible evidence includes packaging, brand name, corporate image, service delivery, and service employees.

Price

In the determination of price, service marketers deal very much with the same price issues as goods marketers. Subsequently, the differences present itself when the intangible characteristic of services specifies that price becomes a quality indicator. The art of successful pricing is to establish a price level that is low enough for the exchange to represent good value to customers, but high enough to allow service providers to achieve their financial objectives. The perishable nature of services makes it important to control the demand and supply of the service offerings. The price component is the easiest to change and normally provides the quickest results. Manipulation of the price can influence and control quantity demand. An increase in price will reduce the demand and/or cause a shift to lower usage periods. Equally, a decrease in price will cause an increase in demand and stimulate new demand for the service.

The price of service offerings is often used by customers as an input into their expectations, purchase decisions, and evaluation of service quality. It is seen as a tangible cue in services with a high risk and experience properties, to form expectations of the service. Price is used as an indicator of quality by customers. Thus, the assumption is formed that the higher the price of service offerings, the more is expected of it by customers.

Distribution (Place)

The distribution decision refers to the availability and accessibility of service offerings to customers. Availability from the customers’ point of view signifies that services are on hand when they want them, while accessibility is the relative ease with which customers can conduct service processes with the service providers. For pure services, the distribution decision is of little relevance, though most services involve a tangible component. As a result, the distribution decision involves physical locations and decisions which intermediaries use to provide the services.

Promotions

The promotion mix for the traditional marketing mix is usually broken down into four components namely advertising, sales promotions, public relations, and personal selling. However, with the promotion of services, there is a greater need to emphasise the tangible elements of services such as packaging, brand name, corporate image, service delivery, and service employees.

The distinctive promotional needs of services stem directly from some of the unique characteristics of services. The intangibility characteristic of services results in customers perceiving them as high-risk purchases, with a need for tangible components as evidence of the service. The inseparability characteristic of services emphasises the fact that the promotion of service offerings cannot be isolated from service providers. Therefore, the visible production process, especially the part played by service employees during interaction, is a critical element in the promotion process. The service promotion challenge is to transform invisibility into visibility, vagueness into sharpness, uncertainty into evidence and risk into benefit.

The development of a promotional mix for services relies on the detailed specification of promotion objectives to ensure that that appropriate messages are chosen and effectively channeled in a cost effective manner to reach the target market. Typical service promotional objectives are:

• To develop an awareness or interest in the organization and its services • To communicate the benefits of purchasing a service • To build a positive image of the organization • To differentiate the organization from its competitors • To remind customers of the existence of the service and the service organization


The services promotion mix uses a combination of channels to convey messages to the target market. These messages are received from sources within the organization and externally. External sources include word of mouth communications or press editorials, while internal communications originate from the traditional marketing mix and from the frontline employees. The combination of communication channels depends on the characteristics of the target market, the size of the service, the nature of the service and the cost of the various channels. The promotional mix of a service organization involves the transmission of messages to past, present and future customers. The ultimate aim is to make future customers aware of the service and influence them towards purchase.

People

People as an element in the service mix include all the human actors - the firm’s employees (internal customers), the buyers (external customers), and other customers - who play a part in service delivery and accordingly influence the buyers’ perception of choice in the service environment. Service employees interact with customers during service delivery processes and provide cues to external customers concerning the services. Hence, it can be said that service employees’ competence, attitude, and appearance influence customers’ perception of services. Customers often experience service employees as synonymous with the service and no matter how small or large a part they play in the actual delivery of the service, they are still the focal point of the service for customers. It is crucial that service organizations stipulate very specifically to their employees what is expected of them during interactions with customers. To achieve the desired standards of service, service organizations’ recruitment and training cannot be left to the human resources department only, but should form an integral part of the service mix decisions.

Within successful service organizations, the human resources department, and the marketing department work together to establish hiring criteria, training needs, and promotion activities to attract and retain employees who can deliver the quality service expected by the organizations’ target market.

The marketing department plays an important role in influencing the experience that both internal customers and external customers will have. External customers choose to visit a service organization because of the messages relayed through the service mix, or word of mouth messages communicated by other customers. External customers, who encounter an unacceptable level of service from internal customers, convey negative word of mouth messages about the service received to other customers. Consequently, it is crucial that marketing departments and human resources departments work together to ensure that the quality of service delivery by internal customers leads to positive word of mouth messages to external customers.

Every employee in an organization must serve other employees in some way or another. Therefore, just as external customers are needed, so are quality employees (internal customers) needed. The responsibility lies with service marketers to involve all employees in the marketing process of an organization. A high level of employee involvement and motivation is directly linked to an improvement in sales, profitability and customer loyalty.

Processes

Processes are the actual procedures, mechanisms, and flow of activities by which services are delivered. Customers judge services on the operational flow or on the actual delivery thereof. The inseparability characteristic of services requires customers to follow a series of extensive or complicated actions to complete the process. Often the logic of these actions escapes the customers. Whether the service process is standardised or customised, it is used as evidence by customers to judge service quality. Standardised services will follow a production-line approach, while customised services command a greater degree of empowerment. Nonetheless, the moment of truth where customers experience the evidence, is not a once-off event but an ongoing process.

The main ingredients of services processes are the people who participate in it. Services are of an integrated nature and the organization’s employees continuously fuse with the external customers. The production and consumption usually takes place at the same time and research into customers’ attitudes towards service organizations suggests that customers see a service as


an integral process in which they are intensely involved. The difference between service processes and manufacturing processes are that:

• The customers are participants in the service processes• Service processes are difficult to structure• The outcome of services is dependent on internal and external factors• The output of service processes leaves only promises and memories • Service processes play an integral part in customer satisfaction.

As a rule, services cannot be fixed to a definite time span, because depending on the nature of the service; it can take anything from a moment to months to complete. A service can be a well-defined process, where all participants are aware of the process but a service can also be ill defined or not obvious to the participant in the process. Services that offer high degrees of customisation are usually ill defined. When service processes progress smoothly, they are hardly noticed by the customers, who are under the assumption that the process will occur without any problems every time it is performed. However, when the service process is not completed successfully, both the internal and external customers are frustrated and distrustful of the service organization. The success of service processes depends on the loyalty and trust- relationships organizations can build with customers.

Marketing and the other organizational functions should work together to determine the needs of the internal and external customers and satisfy those needs by designing and refining effective and efficient customer-friendly service delivery processes.

The actual service delivery process can be performed in three locations namely, • the customer’s environment, • at a store or an office or • electronically or via telecommunications. Management has a great deal of control over the last two service delivery processes.

A service can also be performed on customers, objects, and technological equipment. Knowing this helps to understand the perceived risk for customers attached to the service purchase. Service organizations must consider the importance of communication strategies, appearance, skills, and attitude of service employees. The physical evidence of delivery processes, such as the delivery vehicles, print matter and delivery employees must also support a service organizations’ image. The perishability characteristic of services influences the service delivery process through the difficulty it presents in managing supply and demand. Supply and demand cannot be readily adjusted but techniques such as flexible service hours, price advantages for customers who buy during low demand periods, special offers that can only be redeemed during slack time, and refinement of delivery processes, can provide solutions to service organizations.

Physical evidence

The environment in which the service provider delivers the service and where the customers and the organization interact, as well as any tangible component that facilitates performance or communication of the service, is referred to as physical evidence.

Service organizations need to provide tangible evidence of the service to develop an image in the mind of current and prospective customers. Often physical evidence overlaps with the promotion and distribution mix of the service mix. All tangible representations of services, such as brochures, letterheads, business cards, report formats, signage, equipment, and physical facilities where service are rendered, represent the physical evidence of services.

Physical evidence provides service organizations with excellent opportunities to send strong, consistent, and positive messages regarding the nature of service offerings to customers. Physical evidence is most successful if it is integrated throughout the organization, meaning that it should be included in an organizations’ strategic planning. Once it has been accepted by management, it is the responsibility of the marketing department to implement it throughout the entire organization.

The more intangible a service is, the more it relies on physical evidence to convey an appropriate message to customers. Physical evidence elements are employed to reduce the level of perceived risk experienced by customers. Due to the intangibility characteristic of services, it is hard to evaluate services in advance or to know the outcome of service experiences. Customers are


forever looking for tangible cues by which to judge service quality. They tend to reduce the risk attached to the service offering by comparing the physical evidence of services to the offerings of competitors, use their previous experience as a framework, or rely on the opinion of others. Extremely intangible services do not necessarily provide the greatest risk to the customers. Only when a price is attached to service offerings, can customers truly evaluate the risk attached to it.

The unique characteristics of services cause customers to search for evidence of the service in each of their interactions with the organization. The new elements of the service mix, namely people, process, and physical evidence, provide customers with that evidence and allow them to form their own judgment.


BANK MARKETING

Introduction:

The banking sector in India has been widening its scope due to liberalization. Banks today are not mere suppliers of money. They have become providers of services such as selling insurance, mutual funds, investment opportunities, etc. In the past, the banks did not find any attraction in the Indian Economy because of the low level of economic activities and few business prospects. Today we find positive changes in the National Business Development Policy. The private sector banks failed in serving the society. This resulted in the nationalization of 14 commercial banks in 1969.

Nationalization of commercial banks paved the way for the development of Indian economy and canalized financial resources for the upliftment of weaker sections of the society. The involvement of Public Sector banks transformed the Indian economy. It was felt that bankers review their services not only as financial intermediary but also as a pacesetter.

Adequate financial resources are required for completing welfare projects. The entrepreneurs need large-scale credit facilities on liberal terms and conditions. Individuals have developed new hopes and aspirations from banks and the rural population and backward regions strongly claim their right for a sound and balanced development.

Banking Marketing: The Concept

The banking industry is undergoing a revolution caused by deregulation. This scenario is reflected in the evolution of bank marketing. Banking systems may vary in different parts of the world, the reasons for the variation maybe due to features like social banking, low degree of technological sophistication and cumbersome legal systems.

Marketing of banking services is concerned with product, place, distribution, pricing and promotion decisions in the changing socio-economic and business environment.

The users of banking services or the prospects play a very significant role in the formulation of overall marketing strategies. The bank marketing activities are concerned with the designing of product strategies keeping in view the needs and requirements of prospects.

The causes of Bank Marketing can be seen as:

Rising customer needs and expectations due to improvements in general standard of living.

Entry of foreign and private sector banks in India.

Economic liberalization of Indian economy.

Phenomenal growth of competition due to economic liberalization.

Rise in the Indian middle class with considerable resources.

Government intervention in protecting the interests of consumers.

A comprehensive definition of bank marketing by Deryk Weyer of Barclay’s bank states that: -

“It consists of identifying the most profitable market now and in future by assessing the present and future needs of the customer. This is done by setting business development goals, making plans to meet them, managing and promoting the various services to achieve these goals. Bank marketing is not just advertising and promotion campaigns but a managerial process by which services are matched with markets. This indicates evolving a suitable marketing strategy which suits the need of the customer.”


Banking structure in India

Socio-economic factors affecting savings:

The social and economic factors have a far-reaching impact on the behaviour of customers. This is due to the fact that human beings are directly influenced by the socio-economic consideration.

Social factors

a) Group of family,

b) Family life-cycle,

c) Family decisions, and

d) Role of opinion leaders.

Economic factors

a) Disposable income,

b) Price Index

c) Stages of economic transformation

d) Global economic co-operation.

CHARACTERISTICS OF SERVICES – with reference to Banking

IntangibilityFinancial services are generally intangible, but the service providers go to considerable lengths to ‘tangibilise’ the service for customers. Regular bank statements, ‘gold’ credit cards, and insurance policies are all examples of the way in which the financial services are presented to customers. They can enhance the image of the service and the provider can even bestow status or implied benefits upon the user as with a gold card. Physical reminders of the service product, brand name and value serve to reassure the consumer and help the organisations positioning.

InseparabilityThe degree of inseparability depends upon the type of service and the actual supplier. Many everyday transactions are carried out now via automated services- the automated teller machines (ATMs), net banking etc. Additionally, many financial services are sold by brokers and agents of various kinds. Services are frequently handled by agents are credit card and other currency/travelers cheque encashment.

Heterogeneity/variabilityThe complexity of the service transaction process will determine the extent of variability and this can differ to a large extent between institutions and even with one institution. The


greater the degree of automation within any transaction process, the greater the degree of standardization. Thus simple transactions may be carried out via ATMs and completely standardized or via branch counter where they might be fairly standardized but subject to some variation in quality.Total standardization is not necessarily desirable from the consumer’s point of view. A friendly greeting or being addressed by name can enhance service delivery and while an ATM cannot arrange an emergency overdraft facility when funds are low, branch staff can look at the standing of individual customers and make arrangements when appropriate, satisfying the customer and profiting from charges applying to the account.

PerishabilityThe degree of Perishability depends on the type of service. If a cheque needs to be cleared by a certain date and the system causes delay then the benefits to the consumer are lost so the service could be said to be perishable. By and large, money and financial services are enduring in nature. If a bank’s reserves are not fully utilized profitably through lending or investment they will still retain their worth and may be utilized again at a later date. A bank branch, which does not have any customers at all on a particular day, may actually gain rather than lose profit as staff may be able to use the peace and quite to catch up on other work.

PEST Analysis for financial services

Political/ Legal Influences which have an impact on financial services and consumer confidence include the following: State provision of pensions Government encouragement of savings and investment (for e.g. via tax benefits) Regulatory control and protection (to prevent the collapse of financial institutions and protect investors money)

Economic Economic factors are key variables which have an impact on the activity in the financial services sector. The level of consumer activity is governed by income levels and personal wealth. As income levels grow, more discretionary income is available to spend on financial services. Consumer confidence in the economy and in job security also has a major impact; if lean times are foreseen ahead, savings will take priority over loans and other forms of expenditure. Consumers may also seek easy access savings and be willing to tie up their money for longer periods with potentially more attractive investments.

The main economic factors that should be monitored with regard to fianacial services marketing are as follows:

Personal and household disposable income Discretionary income levels Employment levels The rate of inflation Income tax levels and taxation structures Savings and investment levels and trends Stock market performance Consumer spending & Consumer credit

Socio-culturalMany demographic factors have an important bearing on financial services markets. Changing attitude towards consumer credit and debt Changing employment patterns Numbers of working women The ageing population Marriage/divorce/birth rates Consumption trends

Technological


Technology has a major impact on many industries including financial services and banking in particular. ATM services which not only provide cash but also allow for bill payments, deposits and instant statements are widely used. From the customers’ viewpoint, technology has played a major role in the development of the process whereby the service is delivered. Automated queuing systems have made visits to the bank easier and more convenient. Telephone Banking and insurance services are now being used in place of the traditional branch-based service process. Technology has also played a major role within organizations, bringing about far greater efficiency through computerized records and transaction systems and also in business development, through the setting up of detailed customer databases for effective segmentation and targeting.

The main technological developments fall within these categories; Process developments Information storage and handling Database system

MERCHANT BANKINGMerchant banking may be defined as an institution, which covers a wide range of activities such as management of customer services, portfolio management, credit syndication, acceptance credit, counseling, insurance, etc.The notification of the Ministry of Finance defines a merchant banker as, "any person who is engaged in the business of issue management either by making arrangements regarding selling, buying or subscribing to the securities as managers, consultant, adviser or rendering corporate advisory service in relation to such issue management"

Services of Merchant Banks:

The services of merchant bankers are described in detail in the following way: Project Counseling: Issue Management: Underwriting of Public Issue: Managers, Consultants or Advisers to the Issue: Portfolio Management: Advisory Service Relating to Mergers and Takeovers: Off Shore Finance: Loan Syndication: Corporate Counseling:

Justification for Bank Marketing

Marketing principles, if practised in a right fashion, because of enriching the business potentials, satisfying the customers an subserving the social interests. The innovation in the perception becomes essential to cater to the changing needs and requirements of the users belonging to different segments. It is against this background that we focus on the points justifying the application of marketing principles in the banking organisations. The professionals bearing the responsibility of conceptualising marketing need world class excellence to make the marketing resources productive.

Understanding the customers: The concept of bank marketing is of late, well supported by sophisticated information technologies. In an age of information explosion, the banking services depend substantially on the marketing information system. With the help of different subsystems and to be more specific with the instrumentality of marketing research, the bankers get an opportunity to study and understand the changing levels of expectations of customers. Since while marketing we segment the market and intensify research, it is easy to identify the magnitude or the emerging new trends. The lifestyles, likes and dislikes, preferences, attitudes or the behavioural profile can't remain static. The multi-dimensional developments in the business environment influence the process of change. The marketing practices simplify the task of formulating creative policies and strategies contain more sensitivity. It is against this background that the banking organisations of today need to practise marketing. A good number of foreign banks and even some of the domestic private sector banks have been found conceptualising marketing and getting the desired results.


Satisfying the customers: In almost all the organisations, the firs: and foremost task is to satisfy the customers. If we understand the customers in a right perspective, the success rate reaches at its pea-: If the marketing processes help us in understanding the customers the task of satisfying them is found easier. The formulation and innovation processes of the marketing mixes move in a right and desired order. The customers get the services in tune with then-changing requirements which help banks in expanding the market, increasing the market share and activating the process of mobilising the savings and deposits. The process of excelling competition is geared up and the profitability is maximised. Thus we create market potentials and capitalise on them optimally.

Excelling competition: The modern marketing principles are conceptualised in the banking organisations also with the motto of excelling competition. Of late, the intensity of competition is found numerous problems on that account. The leading foreign banks have made the business environment so competitive that the task of excelling competition is found difficult to the public sector commercial banks. The public sector banks would find it easier to excel competition if they practise marketing and keep on moving the process of innovation since the foreign banks till now emerging as the leading competitors have been found promoting innovation frequently. This makes it essential that the marketing principles are practised. The need of the hour is to enrich the peripheral services so that the mobilisation process gains momentum. It is important to mention that the leading foreign banks have been found promoting the use of new technologies to improve the quality of their services but the public sector commercial banks have been facing strong opposition of trade unions on that account. The application of marketing principles would also help banks in optimising the requirements for the use of technologies.

Formulating and innovating the mixes: We cant negate that the quality factor assumes a place of outstanding significance, specially in getting the new business vis-à-vis retaining the old one. If we turn our eyes on the product mix of the private sector banks, we find peripheral services of world class which add additional attractions to their service mix. The private sector banks have been found promoting consumer financing in tune with the emerging trends in consumerism but the public sector commercial banks have not assigned due weightage to this dimension in their service mix. This makes it essential that while formulating or innovating the product mix they assign an overriding priority to the peripheral services since the core services in almost all the banks are by and large the same. While promoting we need to use sophisticated technologies and the cooperation of advertising professionals to make the process creative. While setting fees, rate of interest or commission, the public sector commercial banks need to go through the strategies followed by the leading competitors. We also need due weightage to the development of people since the personally committed human resources are found efficacious in solving the numerous problems. The recruitment and training facilities, the organisation of refresher and capsule courses, the incentive plans the performance appraisal are some of the important dimensions influencing the quality of human resources.

Social-orientation: It is not only sufficient that we offer to the consumers the world class services and the profitable schemes. It is not only significant that we promote in a right fashion. It is not only sufficient that our pricing policies are motivational. It is not only sufficient that the working employees are well aware of the behavioural management.

In the Indian setting we find this aspect assuming a place of special significance since the masses have high expectations from the banking organisations in general. How to increase our contributions to the process of social transformation is an important task that in addition to the application of marketing principles also requires due attention of the policy decision makers. The aforesaid facts justify the application of marketing principles in the banking services. We can't deny that the public sector commercial banks have not assigned due weightage to the conceptualisation of marketing principles which has been found generating numerous problems. We expect that marketing practices would simplify the task of bank professionals responsible for managing the marketing mix. Application and frequent innovation would make the ways for qualitative transformation. The policy decision makers as well as the RBI need to think over the problems on a priority basis. The bankers serving the public sector commercial banks need to realise the gravity of the situation.


Users of Banking Services

General UsersPersons having an account in the bank and using the banking facilities at the terms and conditions fixed by a bank are known as general users of the banking services. Generally, they are found small sized customers.

Industrial UsersThe industrialists, entrepreneurs having an account in the bank and using the credit facilities and other services for the establishment and expansion of their business are known as industrial users. Generally, they are found large-sized.

ProspectsIt is also essential to clarify the term, 'Prospects! The general or industrial prospects do not use the banking services at present but they have the potentials to become a customer if induced or motivated in a right fashion.

The aforesaid facts make it clear that the banking organisations transact with different types of customers. The behavioural profile of the two types of customers can't be identical. Both the customers are found important to the marketers and their professional excellence is coiled in the essence of studying and understanding the customers in a right perspective. The marketing resources instrumentalise the process of transforming the prospects into customers/users. The psychologists opine that it is very difficult to study the behavioural profile of customers. Of course, they are right since a study of diverse, obscure, complex personalities is not an easy task. This makes it essential that the marketers are well aware of the behavioural science. Of late, the role and range of the behavioural scientists can't be confined to the personality and moral rather can be expanded to the study of the behavioural profile of prospects/customers using or likely to use the services. It is in this context that we focus on the behavioural profile of customers. The buyers' decision making process may be simple or elaborate, static or dynamic, gregarious or distinct or a combined endeavour of all.

The formulation of marketing mix is directly or indirectly related to the changing behavioural profile of customers. A gradual change in the behavioural profile is quite natural if we find a change in the environmental conditions. The increasing rate of literacy, the changing level of income, the significant developments in the field of transportation and communications, the domination of corporate sector in activating the process of development influence our behaviour vis-à-vis the needs and requirements and the lifestyles. It is pertinent that the bank professionals are well aware of these developments so that they don't commit a mistake in studying and understanding the expectations.

Behavioural Profile of Users

There are a number of factors found instrumental in influencing the behavioural profile of both the categories of customers-general and organisational. It is natural that they make decisions on the basis of their changing needs and requirements which are influenced by the emerging trends in business environment. The important factors governing the behavioural profile, such as social, economic, psychological and political need due attention of bank professionals. Unless they understand their behavioural profile, the marketing decisions can't be creative and unless the marketing decisions are creative, the market share can't be increased.

Social FactorsAt the outset, we go through the social factors influencing the behavioural profile of users. Among the social factors, the lifestyles constitutes a place of outstanding significance. Right from the unmarried stage to the stage of marriage, the lifestyle passes through different stages. In this respect, the marital status, age of family members, size of a family and status of the head of a family influence the savings behaviour. It is natural that the family budget of a married couple is different to the budget of an unmarried individual. In a family where there are a number of children, the rate of saving is found woefully low. Like this, we find middle-aged group is considerably influenced by the rate of interest and other financial incentives.


An increase in the social status of an individual or a family also influences the saving potentials. Of course, we find high class of the society earning more and therefore having the potentials to save. But the impact of consumerism can't be under-estimated. The lower class of the society is found interested in saving but due mainly to low income we find potential showing a negative trend.

Economic FactorsThe economic factors play a decisive role since the emerging trends in the economy influence the level of income. We can't negate that ultimately it is income that influences the behavioural profile vis-à-vis the lifestyles. If we earn more, we spend more, we save more. If we earn less; we spend a major portion of our income and so save less. The Wharton study revealed that in urban families with lower incomes, average personal consumption spending exceeded income. It also showed that the average propensity to consume declined rather than rapidly since income rose above the poverty line. Like this, the income expected and avenues for getting additional also influence the behavioural profile. The national economy showing positive trends of developments make the business environment conducive and the banking organisations get a favourable milieu for development. Contrary to it, the economic depression contracts avenues for development and the negative trends in the economy activate the vicious circle. The pressure of inflation is found here significant since the mounting pressure brings down the discretionary income and the banking businesses are adversely affected. It is in this context that we find different dimensions of national and international economies influencing the behavioural profile.

Psychological FactorsIt is right to say that no single theory of consumer motivation is complete enough to explain the behaviour of customers. The attitudes and learning, motivation, conditioning are the key factors in the very context. The study of attitudes and learning answer to the questions mentioned below:1) How do the users learn about the product?2) How do they learn to recognise and recall these services?3) By what process they develop using habits?In a true sense, learning is a process in which total functions are altered and rearranged to make them more useful. In the banking industry, a study of attitudes is found important provided the sources used for the study are reliable. The information regarding the innovative peripheral For the banking organisations, the task of motivation is not so difficult provided the services promised are made available to the users without any distortion. The banking organisations need to innovate their services since this simplifies the process of motivation. Conditioning is considered to be a way of learning. The conditioned response establishes a behavioural pattern but of a temporary nature. It may disappear if the reinforcement is not up-to-mark. The banking organisations need to condition their customers that the services offered to them, are internationally competitive and of world class.

The aforesaid social, economic and psychological factors can't remain static. This makes it essential that the bank professionals keep their eyes open and make possible an intensive study of the changing emerging trends.

Marketing Information System

The formulation of marketing mix is an important functional responsibility and it is essential that the policy decision makers attempt to make the decision making processes information-based.

The main purpose of the Marketing Information System is to make possible coordinated, systematic and continuous collection of information. MIS is an organised set of procedures, information-handling routines and reporting techniques designed to provide the information required for marketing decisions. It reduces the volume of intuition-based decisions as relevant and usable information both from the internal and external sources to make the decisions proactive. Further, it also provides a mechanism for reducing the often overwhelming flood of available market information to pertinent, usable amounts.

The responsibility for an effective MIS rests with the senior executives, assisted by their juniors.


The design and operation of an MIS is delegated to specialists or the system analysts, supposed to be highly skilled in information gathering and handling techniques. An advisory group made up of representatives from marketing, finance and accounting, operation research, data processing and other organisational units not only assist a system analysts but also maintains continual surveillance over the MIS.

The objectives of MIS at regional level are regional planning, implementation and reviewing of the situation. At the corporate or apex level, the objectives are corporate planning, setting of business objectives and goals, identification of profitable opportunities, knowing about the leading competitors or so.

In the primary source, the information is collected from the researchers who make a survey, personal contact, telephonic contact, mail questionnaire, group interview or so. In the secondary source, the small district plan is found helpful as the credit plans include profile of the districts, blocks, population, agriculture, industries, infrastructural facilities of the concerned district. So far as the cost factor is concerned, the data collected from the primary source is found more expensive than the data collected from the secondary source. Here it is right to prefer the secondary source. It is felt essential that there should be a provision for cross checking of data, specially when we collect the same from the secondary source.

Significance of MIS to The Banking Organisations

MIS develops knowledge: World class management of business organisations require world class management of information. If we agree with this view that knowledge is power which simplifies the task of making creative decisions, an overriding priority to the technology-driven marketing information system is need of the hour. Unless we feed to the system quality inputs (date), we can't expe:: quality outputs (information). We are well aware of the fact that the MIS is a process of transforming . the data into information. If we have more information, it is very natural that we have enough potentials to study and understand the market.

Helpful in identifying the profitable opportunities: In banking services, it is pertinent that we search profitable opportunities and make innovative efforts to capitalise on the same much earlier than our competitors. If we have right information, the task of identifying profitable opportunities would not remain difficult. The multi-dimensional changes in the different categories of customers vis-a-vis the business environment have a far reaching impact on strategic decisions. The system makes available to the bank professionals information related to the different areas. This helps them in identifying a profitable market or a profitable segment. We can't negate the fact that due mainly to the unavailability of time honoured information, the branch managers often fail in identifying the profitable opportunities.

Diagnosing the emerging trends in competition: Your potentials, excellence carry no meaning, if you fail in excelling competition. The task of excelling competition is not difficult, if you know and understand your competitors. The MIS helps bank professionals in identifying the intensity of competition. We can't deny that of late, the foreign banks in particular have been throwing a big challenge to the public sector commercial banks. The emerging trends in the market share of the leading competitors and their strategic decisions help the competing organisations substantially. This makes it clear that the MIS helps banking organisations in diagnosing the intensity of competition which is found essential for innovating the marketing inputs. Here, it is pertinent that the system is technology-driven.

Helpful in business expansion: The expansion or contraction in the product line, the inclusion of new services or schemes in the product mix, the elimination of old services and schemes not getting a positive response, the diversification and standardisation in the product mix are sizably influenced by the information that we get from the system. With the help of marketing information system, the banking organisations find it convenient to formulate and innovate decisions regarding their future expansion plans- By collecting data from the primary and secondary sources and further by transforming the same into information with the help of a technology-driven marketing information system, the banks find it convenient to plan for the future.


The marketing information system helps bank professionals in projecting a fair image. When we take stock of our performance, or when we insist on self-evaluation, or when we frame or formulate marketing strategies, the task of image projection becomes easier. We are well aware of the fact that for the development of banking organisations, the development of strong public relations system becomes important. The public relations activities make ways, for the projection of a fair image. In view of the above, it is right to mention that a technology-driven marketing information system helps the banking organisations in many ways.

Market segmentation

In banking services, the banks are expected to satisfy rural customers, urban customers, and high-earning and low-earning customers, small-scale and large-scale entrepreneurs and so on.

Importance of segmentation in banking services:

Since the banks have to deal with different types of customers from different fields and localities, banking services need segmentation.

The purchasing power of potential customers is different. In respect of term deposits of different maturities or deposit schemes, the potential customers are required to be influenced. These potential customers may be located in various pockets of urban areas.

In the Indian setting, we find the emergence of a wide rural market. Here, it is necessary that the segmentation be done in tune with the changing socio-economic conditions of the rural customers.

Thus, market segmentation is important not only from the perspective of expanding the market but also with the motto of satisfying the client. If the marketing decisions of the banks are on the basis of micro-level market segment, only then a fine blend of service and profit elements is possible.

Marketing mix

PRODUCT

Banks products:

(A) Deposits:

Savings, Current, Fixed etc.

(B) Advances:

(1) Fund Oriented:

a) Term Loan,b) Clean Loan,c) Bills Discounting,d) Advances,e) Pre-shipment Finance,f) Post-shipment finance,g) Secured and Unsecured lines of credit.

(2) Non-fund oriented:

a) Guarantees, andb) Letter of Credit.

(C) International banking:

a) Letter of Credit, andb) Foreign Currency.

(D) Consultancy:


a) Investment Counselling,b) Project Counselling,c) Merchant Banking, andd) Tax Consultancy.

(E) Miscellaneous:

a) Traveller Cheques,b) Credit card,c) Remittances,d) Collections,e) Sale of Drafts,f) Standing instructions, andg) Trusteeship.

In the banking the products are services. Services cannot be seen or protected like goods. The potential buyer of the services can form an opinion about the services offered.

The changing trends in the non-banking investments compel certain modifications to be made in the existing product line. The product should suit the market needs.

Bank services are viewed in terms of the satisfaction they deliver and not just the things that are created with value. For instance, a bank account is seen in terms of customer satisfaction such as safety, convenience of paying dues, keeping records, transferring funds, status, and pride in one’s bank. The various deposits, loans and advances, consultancy services, international banking, safe deposits, credit cards, etc. are the products sold by the bank.

Bankers need to identify their core and supplementary product services as it has more marketing implication. The banker should offer an optimum mix of the core and augmented products.

CORE PRODUCT : It is the fundamental benefit the customer buys from the bank. They define what kind of business the firm does, for example, the business of commercial bank. But customers do not buy the core product, they only buy the benefit. The role of the bank marketer is to convert the core products into a generic product, which satisfies the needs of the customer.

AUGMENTED PRODUCT : This is the basic product with some ancillary attached to it. For example, when one opens a Suvidha Account with Citibank, he gets an ATM Card free. The bank marketer must offer a multidimensional product or what is called a ‘product package’.

The product related strategy includes:

Introduction of new schemes- EXAMPLE: DEMAT ACCOUNT.

Modification of the product offered by incorporating technological development – EXAMPLE: Telebanking, Online Banking, etc.

Change in the product line or package – EXAMPLE: From Corporate Banking to Personal Banking; or even deleting an existing service line.

PRICE

Pricing in Banking relates to the interest rates paid by the banker on deposits, interest charged by the banker on loans and demand drafts, charges for various types of transactions and fees for certain services. In India, banks adopt administered pricing structure to some extent as the deposit and lending rates are prescribed by RBI. The charges for banking services are agreed upon by Indian Banks Association. Pricing policy of a bank is considered important for raising the number of actual customers. But even in this regulated pricing environment, pricing

can be used as a tool in their marketing strategy. The specific pricing methods that can be adopted in deregulated environments are:

Cost plus pricing which calls for a detailed analysis of cost structure of various bank products and services.


Market Oriented Approach which indicates what the market can bear or accept as in the case of a corporate client who may not be price sensitive as against an individual client.

Competition related Approach, where the price is decided based on the competitor’s price. In this case, the ‘value’ like high return, convenience, and speedy service must be highlighted.

The banks are required to frame two-fold strategies. Strategies concerned with interest and commissions to be paid to the customers and interest and commissions to be paid by the customer for different types of services.

PROMOTION

The objects of a promotion programme are to inform about the new service product, to persuade the customer, to remind the customer, build image of the bank, etc.

Banking services can be promoted in two ways:

1. Personal promotion: The bank marketer gets the best opportunity to tangibilise the product through personal selling; persuasion is more effective with direct contact. It helps in creating impulse buying.

2. Impersonal Promotion: i.e. advertising, publicity and sales promotion measures. An advertisement in banking is a promise- a promise of satisfaction to prospects who buy the service offered by the bank. Banks use all types of advertisement such as newspaper, radio, television, magazines and hoardings. Also, sales promotion devices such as Point of Purchase material, brochures and advertisement specialties like ball pens, calendars, diaries, etc.

Publicity is a major strength as a promotion tool than advertising as customers tend to believe a news item rather than an advertisement. Word of promotion is yet another important promotion tool as it is a better persuader and convincer than advertising and personal selling, as banking services are narrated by customers themselves. Besides, as Social Welfare and Corporate Social Responsibility are considered to be an important part of banking services, the publicity measures need due care.

PLACE

The place decision mainly deals with selection of a suitable location for the branch. Sound location decisions help in activating the business. The location should have adequate availability of transportation, communication, electricity and other necessary facilities for the smooth functioning of the bank. Technological developments, increased customer satisfaction, inadequacy of the traditional channel to serve all customer segments have brought bout ATM, telebanking, home banking, Internet banking and now SMS Banking.

Another significant development is a strategic alliance set up by the private banks to overcome the handicap of limited branch network. In such alliances the branch network of one branch will be used by the other for selected transactions like bill collection, cheque collection, etc.

PEOPLE

Banking products cannot be separated from the person (banker) who markets them. The product and the seller together constitute the banking product. Banks should adopt internal marketing in order to make the whole business customer-oriented. The bank products should be marketed to the employees first before they are marketed to customers. The corporate mission should be communicated repeatedly and effectively to all employees by the top management.

The placement policy should emphasize that the recruits should not only be conversant with all aspects of banking business but also have the skill for social interaction and tolerance for interpersonal contact.


PROCESS

It involves all activities right from the product conception stage, to product designing and development down to its marketing at the branch level. Banks which were more focused or activity-oriented have shifted to customer-oriented service delivery. This is essentially due to the technological advances. Automation of transactions, accounting procedures, data handling, as well as process re-engineering has helped reduce delays in processing transactions- example: Loan applications, clearing cheques, etc.

PHYSICAL EVIDENCE

Banking products are intangible and physical evidence focuses the banker’s attention on this aspect. The environment of banks is changing. It is becoming friendlier with attractive layouts and décor. Most private and foreign banks like ICICI, Citibank, and HDFC portray a new welcoming and friendly look to the customers rather than drudgery banking counters. Attractive brand names, logos, symbols, etc. add to the customer’s perception of service quality.

PRODUCTIVITYProductivity relates to how inputs are transformed into outputs that are valued by customers. Improving productivity keeps cost in control.

Banks have improve productivity through computerization, by changing transaction systems – like the new banks do not have pass books – they only send quarterly statements; the specimen signatures are also checked through the computers.

Bank Marketing in the Indian Perspective

The Indian banking can be broadly categorized into nationalized (government owned), private banks and specialized banking institutions. The Reserve Bank of India acts a centralized body monitoring any discrepancies and shortcoming in the system. Since the nationalization of banks in 1969, the public sector banks or the nationalized banks have acquired a place of prominence and has since then seen tremendous progress. The need to become highly customer focused has forced the slow-moving public sector banks to adopt a fast track approach. The unleashing of products and services through the net has galvanized players at all levels of the banking and financial institutions market grid to look anew at their existing portfolio offering. Conservative banking practices allowed Indian banks to be insulated partially from the Asian currency crisis. Indian banks are now quoting al higher valuation when compared to banks in other Asian countries (viz. Hong Kong, Singapore, Philippines etc.) that have major problems linked to huge Non Performing Assets (NPAs) and payment defaults. Co-operative banks are nimble footed in approach and armed with efficient branch networks focus primarily on the ‘high revenue’ niche retail segments.

The Indian banking has finally worked up to the competitive dynamics of the ‘new’ Indian market and is addressing the relevant issues to take on the multifarious challenges of globalization. Banks that employ IT solutions are perceived to be ‘futuristic’ and proactive players capable of meeting the multifarious requirements of the large customer’s base. Private Banks have been fast on the uptake and are reorienting their strategies using the internet as a medium The Internet has emerged as the new and challenging frontier of marketing with the conventional physical world tenets being just as applicable like in any other marketing medium.

The Indian banking has come from a long way from being a sleepy business institution to a highly proactive and dynamic entity. This transformation has been largely brought about by the large dose of liberalization and economic reforms that allowed banks to explore new business opportunities rather than generating revenues from conventional streams (i.e. borrowing and lending). The banking in India is highly fragmented with 30 banking units


contributing to almost 50% of deposits and 60% of advances. Indian nationalized banks (banks owned by the government) continue to be the major lenders in the economy due to their sheer size and penetrative networks which assures them high deposit mobilization. The Indian banking can be broadly categorized into nationalized, private banks and specialized banking institutions.

The Reserve Bank of India acts as a centralized body monitoring any discrepancies and shortcoming in the system. It is the foremost monitoring body in the Indian financial sector. The nationalized banks (i.e. government-owned banks) continue to dominate the Indian banking arena. Industry estimates indicate that out of 274 commercial banks operating in India, 223 banks are in the public sector and 51 are in the private sector. The private sector bank grid also includes 24 foreign banks that have started their operations here.

The liberalize policy of Government of India permitted entry to private sector in the banking, the industry has witnessed the entry of nine new generation private banks. The major differentiating parameter that distinguishes these banks from all the other banks in the Indian banking is the level of service that is offered to the customer. Verify the focus has always been centered around the customer – understanding his needs, preempting him and consequently delighting him with various configuration of benefits and a wide portfolio of products and services. These banks have generally been established by promoters of repute or by ‘high value’ domestic financial institutions.

The popularity of these banks can be gauged by the fact that in a short span of time, these banks have gained considerable customer confidence and consequently have shown impressive growth rates. Today, the private banks corner almost four per cent share of the total share of deposits. Most of the banks in this category are concentrated in the high-growth urban areas in metros (that account for approximately 70% of the total banking business). With efficiency being the major focus, these banks have leveraged on their strengths and competencies viz. Management, operational efficiency and flexibility, superior product positioning and higher employee productivity skills.

The private banks with their focused business and service portfolio have a reputation of being niche players in the industry. A strategy that has allowed these banks to concentrate on few reliable high net worth companies and individuals rather than cater to the mass market. These well-chalked out integrates strategy plans have allowed most of these banks to deliver superlative levels of personalized services. With the Reserve Bank of India allowing these banks to operate 70% of their businesses in urban areas, this statutory requirement has translated into lower deposit mobilization costs and higher margins relative to public sector banks.

LATEST DEVELOPMENTS

ATMs may be treated at par with bank branches: -

The spreading ATM culture looks set to get hard knock with the Reserve Bank of India planning to treat them at par with bank branches.

The RBI on Saturday sent a draft circular on a branch authorization policy to all the banks. For the purpose of authorization, the RBI said a “branch” would include a full-fledged branch, a

satellite office, an extension counter as well as offsite ATMs. However, call centers have been kept out of it.

This means that the banks will need the RBI’s advance approval for setting up as well as closing down ATMs. So far, banks could set up ATMs on their own and keep the local RBI offices informed at the time of operationalising them.

The State Bank of India has over 7,000 ATMS – roughly half the number of its branches. ICICI Bank has about 2,000 ATMs, four times its branch network. UTI Bank and HDFC Bank, too, have sizable number of offsite ATMs. The total number of ATMs could be 18,000 throughout the country.


Telebanking and electronic banking: -

A customer can access information about his/her account through a telephone call and by giving the coded Personal Identification Number (PIN) to the bank by Telebanking. Some banks like SBI, Andhra Bank, etc. have made this facility available to some branches.

Automatic withdrawals and transmission of cash balance data and other information about an account is another facility that is offered by banks in a consolidated form through fax or telex. Some banks have also adopted the use of E-mail service for data and information transmission.

Banks have also started with the Electronic display of information through Satellite Communication System and transfer of funds through the same channel for inter branch and inter-bank adjustment and clearance of cheques, drafts, etc.

Cell phone banking and inernet banking: -

Through Inter-net banking one can visit the website of each bank by entering his password and know the account balance and even pass his own credit and debit entries.

This means that we can do our banking through our personal computer sitting at home. Banks may soon allow zero balance savings accounts through Internet facility only.

Customers can now make balance enquiries, download statements and open fixed deposits over the net. They will soon be able to carry out all their transactions over the net. So visiting a bank would become needless.

Time to come, Mobile phones will drive banking transactions. These mobile phones will be equipped with smart cards that are embedded with banking and other information. This mobile phone banking facility is yet to come but the mechanics of linking the banking with the cell phone is being sorted out.

Teller machines are being installed in the banks for the Electronic banking facility. The use of e-mail for banking will open up new avenues for Internet banking.Banking will be on wheels and mobile by the use of smart banking.


INSURANCE MARKETING

Insurance Marketing: Introduction and Concept

What is Insurance?

Insurance is a contract between two parties whereby one party called insurer undertakes in exchange for a fixed sum called premiums, to pay the other party happening of a certain event.

Insurance is a protection against a financial loss arising on the happening of an unexpected event. Insurance Companies collect premium to provide for this protection. A loss is paid out of this premium collected from the insuring public. The insurance Company act as a trustee to the amount collected through premium.

Insurance is generally classified in three main categories, (i) Life Insurance, (ii) Health insurance and (iii) General Insurance

To get insurance an individual or an organisation can approach to an insurance Company directly, through Insurance Agent of the concerned company or through Intermediaries.

Benefits of Insurance

1. Safeguards oneself and one's family for future requirements2. Peace of mind-in case of financial loss. 3. Encourage saving.4. Tax rebate.5. Protection from the claim made by creditors.6. Security against a personal loan, housing loan or other types of loan.7. Provide a protection cover to industries, agriculture, women and child.

Reasons for buying insurance

Insurance Buys Time and Money: People like to refer to insurance as time insurance, the reason being that insurance proceeds are paid to the insured's beneficiaries in case of death or on the maturity of the policy. The money proffered by insurance helps buy time to adjust to the change of circumstances. Insurance provides large amounts of cash that will keep the lifestyle for the survivors the way it was before the insured's death.

Insurance Offers Peace of Mind: For the person who buys an insurance policy, it offers absolute and complete peace of mind. He or she knows that the decision made by him will provide sound benefits in the future, whether or not the individual may live to see it. The life insurance policy will subsequently prove this in the future if and when funds are needed. This is the guarantee of the insurance contract.

Multiple Applications: The future is uncertain for each and every one. No one knows how long he or she will live. The investment benefit is paid to the insured's beneficiaries after his death or it can be used during the life as well. Life insurance policy owners can turn to the cash value of the policy in case of a financial emergency when all avenues are either blocked or denied. They know that they can avail of loans based on their insurance policies.

Insurance policy owners can use the cash value of their policies to meet their long-term financial needs as well. They may have purposefully invested in insurance to use the cash in the policy for their children's future marriage expenses or higher education fees.

Enduring Elasticity: Since life insurance is flexible enough to serve several needs, the insured can keep several long-term goals in mind once he or she invests in the insurance plan. The cash value of the policy can be allocated towards augmenting the monthly income during the retirement years. Leisure years should be turned into pleasure years. Permanent life insurance is designed on the concepts of long-term flexibility.


Financial Security: The insurance policy offers contractual guarantees to people looking for peace of mind when they buy life insurance. Life insurance offers complete financial security. The purchase of life insurance demonstrates concern for a family's future financial well being.

Regard for Family: The purchase of life insurance clearly displays care and concern for the people the policy owner loves.

Insurance is Safer: No financial institution can do what life insurance does. No industry can back its products with reserves and surplus as sound as those of the insurance industry.

The proof of strength and safety that insurance companies have ensured even under the most adverse of conditions is a matter of pride for the entire insurance industry. For generation after generation, life insurance has been acclaimed as the very benchmark of security against which the other industries are measured.

Users of Insurance Services

The formulation of creative marketing decisions is not possible unless we are well aware of the different categories of users using the services of insurance organisations. It is natural that different categories of users are guided by different considerations. The general users assign due weightage to their own interests whereas the industrial users assign an overriding priority to the interests: their organisations. The emerging changes in the socio-economic conditions and governmental regulations influence the interests of both categories of users. It is against this background that an in-depth study of users is found significant to the insurance organisation. Of course, they are working in a regulated environment but even till now, we find enough scope for incorporating necessary changes in the marketing decisions. An individual or an institution, a person or a group of persons availing the services are termed to be the actual users of the insurance organisations. On the other hand both the categories of prospects having the potentials, bearing the willingness but not using the services right now are termed to be the potential users. We also call them prospects. It is well known that the services made available by the Life Insurance Corporation of India and the General Insurance Corporation and other private insurance companies are used by both categories of users. In the insurance business, we find prime focus on the policyholders and therefore an individual or an institution taking the policies is known as the actual policyholder(s) whereas the persons or organisations willing to do so but waiting for the creative persuasive efforts of the agents are known as the potential policyholders. We are well aware of the fact that insurance marketing is an effort to transform the prospects into actual users.

The professionals engaged in servicing the insurance organisations bear the responsibility of understanding the changing level of expectations of the different categories of users at first than activating sincere efforts to develop marketing inputs which energise the transformation process. Some of the users are educated, some of the users are illiterate. Some of the users are of small size whereas some of the users are large-sized. Some of the users live in the rural areas whereas we also find some of them living in the urban areas. It is natural that the behavioural profile vis-a-vis expectations of all categories of the users can't be identical.


The behaviour of users is viewed as an orderly process whereby an individual acts with his/her environment for the purpose of making market place decisions. Needs, motives, perception and attitudes known as the internal factors and the external influences like family, social groups, culture, economic and business conditions are found instrumental in guiding the behavioural profile of an individual. When we turn our eyes on the service profile of insurance organisations the policyholders appear to play an incremental role in shaping the product portfolio. Of course, the business of an insurance organisation is considerably influenced by the changing behavioural profile of both categories of users. The insurance organisations are supposed to study their behavioural profile so that they succeed in fulfilling their expectations. The large-sized organisational users also use the services of insurance organisations with diverse motives. They expect borrowing facilities at liberal terms and conditions in addition to the safety of their


assests. The shaping of expectations is substantially influenced by the performance and quality services offered by the leading competitors. We can't negate that the leading foreign insurance companies have made their service profile lucrative, attractive and productive. They innovate their marketing mix frequently and assign due weightage to the changing needs and requirements of prospects. The marketing information system is well managed by the new generation of sophisticated information technologies which helps them in identifying the level of expectations. This makes their insurance.decisions proactive. It is also right to mention that the public sector insurance organisations find it difficult to improve their rank profile since the expectations of users are not given the due weigthage.

The needs and requirements of rural and urban segments, men and women segments, teens and youths segments, affluent and weaker segments, individual and institutional segments can't be identical. There are a number of factors to influence the hierarchy of human needs. The emerging trends in economy, the social-transformation processes, the changing inflationary pressure, the amendments and reforms in governmental regulations, the instrumentality of sophisticatied technologies in offering the services are some of the key factors governing the hierarchy of needs vis-a-vis the expectations. In addition, the innovative efforts made by the leading insurance companies also play an important role. The insurance professionals in general and agents in particular bear the responsibility of identifying the emerging new trends and to develop marketing resources accordingly.

The Life Insurance Corporation of India and the General Insurance Corporation of India, the well-established public sector insurance organisations in the Indian perspective need to study the behavioural profile of users so that the formulation of marketing mix is made optimal to the changing expectations. The core and peripheral services are required to be made of world class. The profitable opportunities in the rural sector are required to be capitalised on effectively. The behavioural profile of insurance personnel needs an intensive care. The premium structure and bonus decisions are to be made rational. The creativity in the promotional measures is to be made possible. And all these dimensions are directly or indirectly related to the behavioural profile of users of the insurance organisations.

The Life Insurance Corporation of India is found preserving its faith in the virtue of thrift and saving for a future objective. What the rural prospects expect is the loan of the sum assured so that they can dig or deepen their well or reclaim waste land or start a poultry farm. This makes it clear that if the public sector insurance organisations want to tap the available potentials in the rural areas, they have no option but to study the behavioural profile of that segment. The services sector has now been found attracting the up coming entrepreneurs, the investment is likely to be commercially viable and therefore, the insurance organisations need to innovate their service mix. Thus it is clear that the insurance companies can't be successful in making their marketing decisions proactive unless they are aware of the changing requirements of different segments. They need to enrich the information system which would help them substantially in studying the changing trends.

We are well aware of the fact that the insurance business rests on the professional excellence of agents. The agents and the rural career agents promote the business and they based on the face-to-face communication get a feed back that plays a decisive role in innovating the marketing decisions of the insurance organisations. The insurance professionals need to accept the responsibility of making it sure that the suggestions given by the sales personnel are given due treatment while formulating or innovating the marketing decisions.

In addition to the general users, the insurance organisations are also concerned with the industrial organisations. It is important to mention that the corporate securities are an important medium for the investment of insurance funds. In the Indian perspective, we find insurance organisations perferring investment in the government securities. Unlike other countries, the public sector insurance organisations in India are found liberal to the government. In almost all the countries of the world, we find insurance companies investing substantially in the corporate securities. An attitudinal change is felt essential to make the insurance business commercially viable.

All the subsidiary companies are found promoting fire and marine insurance to the concerned users. Here, the insurance organisations are supposed to study the changing level of different categories of users so that the formulation of marketing decisions is processed in a right fashion.


We can't deny the fact that the leading foreign insurance companies have been assigning due weightage to the behavioural profile of users and it is against this background that we find them very much successful in fulfilling their expectations. They believe in making things happen and keep themselves engaged in intensifying research to promote innovation. If we turn our eyes on their service profile, it is apparent that the users/policyholders vis-a-vis their interests are given.top priority. They attempt to add attractions to their product mix by making their peripheral services innovative which help them in snatching business and increasing the market share. Of course, they work in a regulated environment, however their professionals are found devising new services and schemes. We also find them using sophisticated information technologies which help them considerably in knowing and understanding the behavioural profile of prospects.

In view of the above, it is right to mention that an in-depth study of the behavioural profile of the users of insurance services is important to the insurance professionals. They by doing so can make their product mix motivational. The public sector insurance organisations are also supposed to study the same so that the temptation of users to the foreign insurance companies is minimised. It is in this context that we find it essential to the time honoured fulfilment of users' interests and their expectations. We can't check the process of change. We cant stop the process of development. We can't make the business conditions liberal. The only thing that we can do is improving the quality of services. In the Indian perspective, the insurance organisations would get a profitable rural market in future and therefore to promote future marketing, they have no option but to study the changing level of expectations of the users in the 21st century. They can't devalue the instrumentality of behavioural profile of users, if they have to survive and thrive.

In addition, it is also impact generating that the insurance organisation in general and the public sector insurance organisations in particular assign an overriding priority to the behavioural profile of insurance professionals and agents. A very few of the insurance organisations find it essential to use time and money for identifying the nature and behaviour of insurance personnel. If the personnel dealing with the customers lack even the fundamentals of behavioural management, the task would remain difficult and unfulfilled. We are not supposed to make the marketing resources unproductive and the resources developed without knowing the behavioural profile would hardly carry any meaning. Hence a study of the behavioural profile of both-the end users and the insurance professionals would benefit the insurance organisations in many ways.

Insurance Product Planning and Development

The success of an organisation is substantially influenced by the time honoured development of product that requires the formulation of an intelligent as well as a realistic plan. The purpose of insurance business is to generate profits besides subserving the social interests. The present business environment is volatile and even the insurance business is likely to be more competitive. The foreign insurance companies have been found planning and developing their services and schemes in the face of emerging trends in the socio-economic conditions. The public sector insurance organisations need to realise the gravity of the situation and to activate efforts for planning and developing their services and schemes only not with the motto of generating profits but also to energise the process of social transformation. Planning is a process directed towards making today's decision with tomorrow in mind and means of preparing for future decisions so that they be made rapidly, economically and with as little disruption to the business as possible. Further it involves process of developing and maintaining a viable fit between the organisation's objectives and resources and its environmental opportunities. We find numerous changes in the needs and requirements of different categories of users. If the insurance organisations have to thrive they have no option but to assign due weightage to the product planning and development. It is against this background that we go through different dimensions of product planning and development.

During the yester decades, we have witnessed a number of developments in the business environment. This in a natural way gravitates our attention on the planning and development of product. The strategy for the same rests on the emerging new trends in the social, economic, political, technological, legal environmental conditions. In addition, the incoming changes in the natural environment also influence the strategic decisions.


Yesterday, the policyholders had limited hopes and aspirations but today, they expect more and they would like even something more tomorrow. This focuses on the fact that strategic decisions are influenced by the environmental conditions. The public sector insurance organisations need to realise the fact that failing the planning and development of services, they would not be successful in increasing their market share. The recent developments in the business environment make it essential that both the public sector insurance organisations (LIC of India and the GIC of India) think over the problem on a priority basis.

The product development needs a new vision, a new approach and a new strategy. Till now the public sector insurance organisations have not made possible an optimal utilisation of their marketing resources specially in the rural areas where tremendous opportunities are found available. This makes it essential that they assign due weightage to the development of services and schemes which cater to the changing needs and requirement of the rural segment.

It would be more prudent that the LIC of India is allowed to pursue a policy of Direct Investment for Rural Development instead of indirect financing. It may grant direct loan to Community Development Block authorities for implementing development-oriented schemes in their command areas. Besides, a provision for direct loan to the cooperative societies for financing their main activities and direct and indirect financing for house construction activities in the rural areas need an overriding priority. The numerous schemes for financing house construction activities introduced by the LIC of India so far show an avert leaning towards urban population. This is required to be changed.

In the development of product, the cooperative investments need due priority. At present, the Corporation is found concentrating on the governmental securities and private investments are found of secondary importance. In almost all the countries, we find insurance companies channelising corporate investments. This influences the rate of profitability of the insurance companies and in addition also contribute considerably to the socio-economic transformation process. It is important to mention that in USA and Canada, we find more than 50 percent of the life funds invested in the corporate securities. Of course, we find the underwriting activities gaining the momentum in the Indian context but till now it is at the nascent stage.

Of late, a number of new policies have been included in the product mix of both the public sector insurance organisations but keeping in view the strategic decisions of the foreign insurance companies, they need to speed up the process of product innovation. While innovating the services or schemes, they need to keep in their minds that policies covering the maximum possible lives are given due weightage. New annuities and policies activating the process of savings-generation and energising the process of welfare-orientation would serve our purpose. The insurance business is to be looked at as a concept ofPerpetual Corpus. It can best be studied in the face of past social concepts, changing conditions and expectations of the prospects.

In the years to come, we expect a substantial increase in the number of potential policyholders. This naturally necessitates product planning and development in tune with the changing socio-economic conditions. The objectives of LIC of India are to spread life insurance much more widely and in Particular i the rural areas and to socially and economically backward classes with a view to reaching all insurable persons in the country and proving them adequate financial cover against death. Keeping in mind the investment of funds, the primary obligation to its policyholders whose money it holds in trust, without losing sight of the interest of the community as a whole, the funds to be developed to the best advantage of the investors as well as the community as a whole, keeping in view the national priorities and obligations of attractive return; conduct business with utmost economy and with full realisation that the money belongs to the policyholders; act as trustees of the insured public in their individual and collective capacities; meet the various life insurance needs of the community that would arise in the changing social and economic environment; improve all people working in the interest of the insured public by providing efficient service with courtesy and promote amongst all agents and employees of the corporation a sense of participation, price and job satisfaction through discharge of their duties with dedication towards achievement of corporate objectives.

In view of the above, the following key points emerge:• Inclusion of new product or policies having a rural bias.• Due weightage to the socially and ecomomically backward classes.• Maximising the mobilisation of savings by offering lucrative schemes.


• Assigning due weightage to the interests of investors.• Maintaining economy in the business by promoting cost effectiveness.• Acting as a trustee of the policyholders.• Keeping in mind the emerging trends in the business environment.• Improving the quality of customer/user services.• Promoting a sense of participation.The General Insurance Corporation of India bears the responsibility of fulfilling the following objectives:• Making provision for grants to its subsidiaries.• Advising the subsidiaries in respect of management, cost, commission.• Advising the subsidiaries in the investment of funds.• Advising the subsidiaries in conducting the insurance business with a view to excel competition.. • Starting the business of general insurance as and when it is felt essential.In view of the aforesaid objectives of the GIC of India, it is pertinent that the development of product is assigned due weightage. This requires a change in the nature and form of services, schemes, policies which cater to the changing needs and requirements of the users.

The LIC of India has been found fuelling the process of fulfilling the corporate objectives but even today, we find tremendous opportunities to be capitalised on profitability. We can't negate the fact that the corporation, has not been serious to the tapping of profitable opportunities in the different segments: This makes it essential that the insurance organisations conceptualise marketing. It is right to mention that in the Indian perspective both the public sector organisations have devalued the customer services which in due course is to complicate the task of business expansion. The customers at large feel that the foreign insurance companies have been instrumental in protecting the interests of the policyholders whereas the public sector insurance organisations take it very lightly. This is an unpleasant development which needs an attitudinal change and for that the insurance organisations have no option but to implement innovative marketing so that the interests of policyholders are protected and at the same time, copious avenues are paved for channelisation of investments vis-à-vis the generation of profits. It is in this context that we make a strong advocacy in favour of formulating the marketing mix in the face of recent developments. This draws our attention on innovative marketing for promoting the public sector insurance business.

Insurance Market Segmentation

In insurance industry, profiling is very important in determining premium rates. Typically, insurers collect every information available. However, analysing thoroughly is not feasible since the number of variables is normally large.

The starting point is thus mass marketing. In mass marketing, the seller engages in the mass production, mass distribution and mass promotion of one product/ service for all buyers.A niche on other hand is a more narrowly defined group seeking a distinctive mix of benefits. Marketers usually identify niches by dividing a segment into sub segments.

Also, in terms of product complexity, insurance products can be categorized into low complexity and high complexity products. Low complexity products: These are simple products with a standard set of covered risks, perils and hazards.High complexity products: They have a large number of riders and warranties and do not indemnify certain causes of loss.

PRODUCT COMPLEXITY

LOW HIGH

TARGET SEGMENTNiche Market Fire Insurance (different risk profiles

for each), Marine Insurance1. Weather Insurance2. Product Liability

Mass Market Householder’s comprehensive Policy , Medical Insurance

Personal Accident InsurancePension Products


The distribution strategy should vary according to the type of policy. Insurance products with low complexity can be sold through bank-assurance, but products with high complexity should not be sold through the same channels, as it would be very difficult (in terms of time, effort and cost) to train bank employees in understanding the finer details of the complex policies.

Products with high complexity need a certain amount of customer hand holding in terms of explaining the terms, conditions, riders and warranties of the policy. In case of niche marketing, direct marketing can be used in the form of e-mails and direct calls through agents to specific customers belonging to the target segment. For high complexity niche products, spreading awareness and selling through financial advisors, consultants and brokers would also be a good strategy.

PRODUCT COMPLEXITY

LOW HIGH

TARGET SEGMENTNiche Market Direct marketing through

personalized e-mails Advertise in area specific

journal with toll free numbers to set up appointments

Agents

1. Well trained agents2. Financial

advisors/consultants3. Brokers

Mass Market 1. Bancassurance2. Postal department3. Agents

1. Well trained agents2. Advertise in newspapers

with toll free numbers to set up appointments

Market Segmentation in Insurance

Flower of Services

Flower of services refer to a well-formed package of total services with all the supplementary services being well formulated along with the core services. The various petals of the flower are:


Households

Industrial Sector

Trade Sector

Institutional Sector

Regional WiseRural Sector

Segment Sub Segment

Information:A marketer needs to provide adequate information to his employees and his customers. This information is general information provided through various communication channels.

In the insurance industry information is provided to the customers with the help of:

o Agentso Seminars o Web siteso Print mediao Radioo Television, etc.

Consultancy: This is additional customized information provided to the potential customers by the service provider. In the insurance industry it is provided by company’s staff and agents.

Example: In LIC when a customer enters asking of information about the policy, he is directed towards the assistant sales manager. Assistant sales manager will listen to the customer’s requirement and as per his requirement list the number of policies that are available. He will also ask the customer about the price and limit the number of options for the customer, so that he can easily choose the policy without confusion.

Order taking:Order taking should be done without mistakes. In LIC order taking is generally done by:

o By Agentso On Website o By Assistant sales manager directly in the office.

Hospitality:Hospitality is a very pretty petal, reflecting pleasure at meeting new customers and greeting old ones when they return. Hospitality finds its full expression in face-to-face encounters.


In LIC customers directly come in contact with the sales manager. The customers are treated as guests. The sales managers of LIC are given special training of how to sell the policies to the clients. It is only in LIC that a customer can meet the chairman directly without any appointment.

Safe keeping:It is in the process and procedures used by marketers to safe guard and to maintain secrecy.

In LIC the data of the customers is very important. They feed the data of the customers in their Front and Application Program Software that is connected with all the branches of LIC. The data is only available with the sales people and not shown to any person.

Exceptional:Exceptional service means service over and above customer’s expectations.

LIC has the fastest claim settlement in the world thereby providing exceptional service. LIC also solves complains of the customers within 7days.

Payment:The payment of premium is normally through cheques. Customer can make payment in LIC through:

o Agentso Loanso Web siteso Standing instruction to banks:In this the account holder will give standing instruction to his bank to pay the amount of premium every month without his consent on the given date directly to LIC.

Billing:The billing should be done in such a way that there are no mistakes and if there are any they must be immediately rectified. The billing should provide break-ups of premium charged, service charges, etc.

Marketing Mix of Insurance Marketing

Product Mix

The Width of a product mix: It refers to how many different product lines are available. In case of insurance sector, there are generally three different product lines i.e. Life Insurance, Marine Insurance and Fire Insurance.

The length of a product mix: It refers to the total number of items in the mix. In case of insurance sector, the following is the length of product mix:


The depth of a product mix: The various products and various types of the products with distinct features. In the insurance sector, one policy can be made available in different variations. Some of the examples are as follows:

Life Insurance:

These product mix dimensions permit the company to expand its business. E.g.: It can add new product lines thus widening its product mix.

General Insurance:


Product levels:In this figure there is a nucleus or core in the center, which is supported by series of tangible and intangible features and benefits and these form a cluster around the core product.

Level Type of service

Contents Insurance sector

1 Core service Basic service product Life Non-life insurance policy

2 Expected service

Basic product and minimum purchase conditions that must be met.

After sales service Low claim settling period.

3 Augmented service

Something different, which enables one product to be differentiated from other

Technology Online premium payment Payment through credit cards Standing instruction to bank

4 Potential service

Features that attract the customers and are useful to them.

Maturity claims settled on or before the maturity date.

Loans

Price Mix

In the insurance business, the pricing decisions are concerned with the premium charged against the policies, interest charged for defaulting the payment of premiums & credit facilities, commission charged for underwriting & consultancy services

Premium: Premiums are the periodic payments usually monthly or quarterly that the policy holder pays to the insurance company to purchase and keep a policy in force.For example in case of life insurance according to the policy it may be the amount payable during the endowment term of the policy or until the death of the life assured whichever is earlier.The basis on which the insurance company decides the amount of premium to be paid by each person is determined mainly by 3 factors: Mortality Tables:All insurance companies refer to different mortality tables. These tables differ from country to country. The mortality table indicates the probability of a person dying in a particular age group. For e.g. in an age group of 25-30 years, the probability might be just two, but this probability would increase for a higher age group of 45-50 years. Life Insurance Company (LIC) with its long-standing presence has a mortality table, which is grossly outdated. Some other insurance companies have got their own tables but they are more or less in line with that of LIC. Expected Surplus:The premiums collected by the insurer are invested in capital markets. There is a fixed investment pattern for the insurer. Out of the surplus earned on the premiums invested, 95% is distributed to the policyholders and the insurance company retains the balance 5%. Expenses: An insurance company has to incur expenses in the form of commission to agents, office expense, advertising expense, salaries to employees. These expenses are to be managed by the company in the 5% surplus earning which they earn as mentioned above.

Now the criteria’s on which the premium amounts are fixed are different from different types of Insurance’s.


Life Insurance Pricing:The pricing in case of life insurance is done on the basis of: Life Expectancy: In case of life insurance, the premium amount tends to be different for different customers. This differentiation is on the basis of age, medical history of a person. Age - E.g.: Low premium is charged for children and youngsters as it is assumed that they are at a lesser risk of death as compared to the aged people.Medical History - The medical history should be revealed to the insurance company by the customer in Utmost Good Faith i.e. the insured must provide to the insurer complete, correct and clear information of the subject matter of insurance.

Motor Vehicle Insurance:Car insurance companies take many factors into account when determining what premiums the insured will pay. Everybody does not pay the same premium. You pay a premium based on what the company assesses as the possible risk you pose. The major factor is the age and condition of the car. The other factors are as follows: - Multiple cars or policies: When you have more than one car on an insurance policy, most companies will give you what is known as a multiple line discount. Because you use the company for all of your auto insurance needs, they reward you. Distance and amount of driving you do: Most car insurance companies ask prospective clients how far, and to where, they do most of their driving in a day. The thinking is that further you have to drive, and the more often you do it, the more likely you are to have an accident. The person who commutes 45 minutes to work every day is going to pay more than the person who drives 10 minutes to work. Likewise, a college student who walks to class, and drives home three or four times a year will cost less than the college student who spends 30 minutes commuting to and from campus each day. Location of your car: Car insurance companies rate areas according to the number of accidents or thefts that occur in a specified amount of time in that area. Sometimes, the company can even pinpoint a neighbourhood. If you live in a large city, your rates will be higher than if you live in a town.

Fire and Marine Insurance Pricing:The principle of utmost good faith is applicable even for fire and marine insurance.E.g.: If a trader while taking a fire insurance policy does not disclose the previous occurrence of fire in the factory, and subsequently after taking policy, there is another fire, the insurance company may refuse to pay the compensation if it learns about the previous occurrence of fire which was not disclosed at the time of taking the policy.The pricing in case of fire and marine insurance is done on the basis of: Type of Building: In case of a building the rate of premium also depends on the type of construction. If it is wood construction the insurance premium is low as the cost in constructing a wood building is low in comparison to a concrete building that has higher premium amount Past Experience: If a fire or marine insurance company has a past experience of settling a claim successfully then, the credibility of the company increases and it charges higher premium for similar policies. The customers are assured that the company will be able to handle the claim well as it was done in past and hence they are ready to pay higher premium.

Discount Pricing:In insurance sector, discount is offered if group insurance is opted for. Group Insurance Scheme is meant to provide life insurance protection to groups of people. Administration of the scheme is on group basis and cost is very low.

Discount is given on group insurance scheme because the insurance company gets a large number of customers at a time and hence it saves expenses on promotion and advertisement, which are to be incurred to attract new customers.Thus, discount is given in order to attract more customers at a time by this group insurance scheme. The cost incurred on giving discount is much less as compared to the cost spend and advertising and promotion. Hence discounting is much more profitable for the company.


However, 65 per cent of the pricing is still determined by the government that is the Tariff Advisory Committee. So the rates of premium are more or less the same. It is going to change over the next few years. In non-tariff products like personal accident etc there is a lot of pressure on pricing. Companies will have to be reasonable while determining a pricing structure because, across the globe, there are instances of companies going bust while playing the game of undercutting state-run companies.

Place Mix

Channels: In case of insurance sector, the following channel of distribution is followed according to the target market:CHANNELSDirect Selling Agents

Financial Advisors Call Centers

Partner Selling Bancassurance Postal Department Selling through Corporates

Direct Selling: Agents: The agents are selected and recruited by the development officer of the insurance company. These agents inform the customers about the various insurance policies offered by the company and convince them to buy these policies. Financial Advisors: The financial advisors are also consulted by the customers regarding their financial matters. These advisors suggest their clients to get their goods insured against any calamity or risk. Call centers: The people who require insurance call up the call centers. These call centers send their direct marketing agents who go to the customer’s place and sell the insurance policy.

Partner Selling: Bancassurance: In bancassurance, the insurance products are sold through the banks network of branches. Om Kotak Mahindra has tie-up with Dena bank, by which former doesn't entertain bancassurance with any other bank and the latter also doesn't distribute policies of any other insurance company Postal Department: . Insurance companies can tie up with the postal department to sell and distribute various insurance covers. This would certainly require upfront training costs, as the postal employees in turn need to educate and sell the concept and benefits of insurance to the people in rural areas. Selling Through Corporates: Insurance can be sold through corporates too.E.g.: When a customer purchases a Maruti car, he gets the insurance of the car free from the Maruti Company itself. Thus this is termed as selling insurance through corporates.Electronic Channels: In the last decade, numbers of technological advances have taken place due to immense use of EDI (Electronic Data Interchange)

CHANNELElectronic channels LIC on internet

Information Kiosks SMS

Information kiosks: LIC have set up 150 interactive Touch screen multimedia KIOSKS in prime locations in metros and some major cities for dissemination information to general public on our products and services.


SMS: SMS through mobile phone is recently new technology introduced by the LIC to promote their product.

PlaceIn insurance, location, the place where office situated is not as important as mostly the agents of the insurance company goes to the place of the customers for doing most of that customers work.

Physical Evidence

Physical evidence is the environment in which the service is delivered and where the company and the customers interact and any tangible goods that facilitate the performance and communication of the service.Services are intangible and heterogeneous. Intangibility means that services cannot be displayed, physically demonstrated or illustrated; heterogeneity means that consumers cannot be certain about performance on any given day. It plays a major role in enhancing customers’ perception of the service quality.However, in case of insurance sector, the customer rarely visits the insurance company. The customer comes mostly only in contact with the service provider.

Insurance Service Tangibles as Physical Evidences

1 Policy Documents

2 Brochures

3 Periodic Statements

4 Renewal Notices

5 Business Cards

6 Stationary

7 Calendar, Diaries

8 Letters/Cards

9 Website

People Mix.

Employees:

Employees are very crucial because: They are the service They are the brand They are the marketers They are the organization in the eyes of the customers.

The various employees involved in providing service to the customer in insurance sector are:

Customer service representatives: They, process insurance policy applications, changes, and cancellations. They review applications for completeness, compile data on policy changes, and verify the accuracy of insurance company records. They may also process claims and sell new policies to existing clients. Marketing and sales managers:These constitute the majority of managers in carriers’ local sales offices and in the insurance sales agents segment. These employees sell insurance products, work with clients, and supervise staff. Claims adjusters, appraisers, examiners, and investigators:


These decide whether claims are covered by the customer’s policy, confirm payment, and, when necessary, investigate the circumstances surrounding a claim. Claims adjusters work for property and liability insurance carriers or for independent adjusting firms. They inspect property damage, estimate how much it will cost to repair, and determine the extent of the insurance company’s liability; in some cases, they may help the claimant receive assistance quickly in order to prevent further damage and begin repairs. Underwriters: Underwriting is another important management and business and financial occupation in insurance. Underwriters evaluate insurance applications to determine the risk involved in issuing a policy. They decide whether to accept or reject an application, and they determine the appropriate premium for each policy. Insurance sales agents: About 15 percent of wage and salary employees in the industry are sales workers, selling policies to individuals and businesses. Insurance sales agents, also referred to as producers, may work as exclusive agents, or captive agents, selling for one company, or as independent agents selling for several companies. Through regular contact with clients, agents are able to update coverage, assist with claims, ensure customer satisfaction, and obtain referrals. Lawyers: The insurance industry employs relatively few people in professional or related occupations, but those who are so employed are essential to company operations. For example, insurance companies’ lawyers defend clients who are sued, especially when large claims may be involved. These lawyers also review regulations and policy contracts. Nurses and other medical professionals advise clients on wellness issues and on medical procedures covered by the company’s managed-care plan. Computer systems analysts, computer programmers, and computer support specialists: These are needed to analyse, design, develop, and program the systems that support the day-to-day operations of the insurance company. Actuaries: These represent a relatively small proportion of employment in the insurance industry, but they are vital to the industry’s profitability. Actuaries study the probability of an insured loss and determine premium rates. Customers: People mix not only includes employees but also customers. The customers are to be treated with respect and courtesy.

Process Mix

In case of insurance sector, the process mix includes the various interactions that take place between the insurance agent and the customer in the process of selling the policy to the customer till the settlement of claims.

The following process mix is followed by insurance companies in case of life insurance:

1. The insurance agent calls up the customer and informs him about the different policies offered by the company and the price mix of all the policies. If, the customer seems interested in taking the policy then, he fixes an appointment with the customer.

2. The insurance agent meets the customer and gives him some information about the insurance company and also about the benefits of the policy.

3. The customer is then asked to fill a financial review form (FRF) and the agent is asked to find out the standard of living of the customer so that the insurance company gets a clear picture about the financial condition of the customer and what kind of policy he can afford.

4. The insurance company offers various policies but they might not be suitable for the customer hence, on the basis of his requirements and financial status, the insurance agent suggests two or three policies to the customer, which will be suitable for him.

5. The insurance agent explains the different policy plans in detail to the customer i.e. the amount of premium to be paid, the time interval at which the premium is to be paid, the benefits of each of the policy etc. A brochure is also provided to the customer wherein the entire description of all the policies is given.


6. Then, the insurance agent provides a feedback form to the customer and asks him to give his feedback regarding the policies that he has been informed about. This feedback is taken in order to find out whether the customer is satisfied with the plans of the policy or whether the company needs to make the policy plans more attractive so that it may appeal to its future customers.

7. Then, the next appointment is fixed by the insurance agent with the customer and in this meeting; the customer selects the policy plan, which appeals to him. The customer is then asked to fill up the proposal form which contains various details of the payment and he is asked to make the first premium payment.

8. Then, the insurance agent submits the duly filled and signed form in the insurance office along with the other necessary documents. E.g.: Medical Reports in case of Life Insurance. Submission of Age Proof is essential as the rate of premium payable on a life insurance policy generally varies with age, and therefore age is one of the most important factors in determining the rate of premium payable in an individual case. The following is accepted as age proof:

o Certified extract from municipal or local body’s records made at the time of birth. o Certificate of Baptism if it contains date of birtho Passport issued by passport authorities in India.o Certified Extract from school or college records, if date of birth is mentioned.

The customer must get himself examined from the approved doctor of LIC. The medical examination is necessary to determine the physical fitness of the customer. If the medical report is favourable, then only LIC will issue the policy.

9. An average twelve days time is taken by the company to verify the submitted documents. After the twelve days period, the insurance agent meets the customer to provide him a policy document, which consists of the terms and conditions of the policy. This is because terms and conditions of the policy differ for different customers due to differences in medical conditions of customers in case of life insurance and due to differences in nature of goods and mode of transportation in case of marine and fire insurance.

10. Then, a reconfirmation is taken by the agent from the customer that he agrees with the terms and conditions of the policy.

11. The insurance agent then regularly collects the premium from the customer whenever the premium becomes due.

Promotion Mix

Advertising:It is a paid form of non-personal communication. It is used to create awareness and transmit information in order to gain a response from the target market. Forms of advertising are as follows:

o News Papers and Magazines:LIC give ads in the newspapers and magazines round the year to continue its brand image and also when new products are introduced. Normally its ads are published in Times of India.o Electronic media:Insurance companies also advertise its services in the Electronic media like:

Internet (Websites):Companies like LIC, ICICI Prudential all have websites from which people can get the information about their products, prices, various schemes, and lots of other information. People can also purchase the product through this website. Television:Companies like LIC, Met Life India, advertise on television to make people aware of their products and services. Radio:


ICICI Prudential advertises on 92.5 red Fm.o Hoardings:LIC put its hoardings where there is a mass flow of people, especially outside the railway station or at the backside of the bus.

When Met Life was introduced it has put his hoardings on the side of the train, to target huge number of people. o Brochures:Companies provide brochures to the customers so that they can have a look on various schemes and their prices.

Public relations:Public relations are helpful for the companies to build their brand image, to maintain good relationship with customers, to make the people aware of its recent happenings, etc. Mediums of Public relations are:

o Press releases: This helps the company to convey its message to its customers and other people.o Seminars: These are held to provide information about the new product launched, position of the company in the market, etc.

Sales Promotion:Gifts:

LIC provides diaries, pens, booklets, etc to its customers.o Sponsoring Events: Eg: Max New York Life Insurance Company has sponsored the recent India-Zimbabwe-New Zealand tri series.

Personal selling:o Agents: It is the most widely used method of promotion by all insurance companies. They recruit, train and motivate the insurance agents to convince the customers to buy insurance policies of that particular company. The agent also collects the monthly premium and settles the claims of the customers.

Word of Mouth:

Word of Mouth promotion plays the role of hidden sales force. The word of mouth promotion is normally carried out by customers, agents and employees. It can be positive or negative depending upon the service or experience they receive.

o Customers: It is important for the organization to provide customers with quality service so that he is satisfied and spread the good word of mouth. On the contrary if the customer is not satisfied with the service or experience he spreads bad word of mouth.

The Insurance Regulatory and Development Authority (IRDA)

Reforms in the Insurance sector were initiated with the passage of the IRDA Bill in Parliament in December 1999. The IRDA since its incorporation as a statutory body in April 2000 has fastidiously stuck to its schedule of framing regulations and registering the private sector insurance companies.

The other decisions taken simultaneously to provide the supporting systems to the insurance sector and in particular the life insurance companies was the launch of the IRDA’s online service for issue and renewal of licenses to agents.

The approval of institutions for imparting training to agents has also ensured that the insurance companies would have a trained workforce of insurance agents in place to sell their products, which are expected to be introduced by early next year.

Since being set up as an independent statutory body the IRDA has put in a framework of globally compatible regulations. In the private sector 12 life insurance and 6 general insurance companies have been registered.


The Government of India liberalised the insurance sector in March 2000 with the passage of the Insurance Regulatory and Development Authority (IRDA) Bill, lifting all entry restrictions for private players and allowing foreign players to enter the market with some limits on direct foreign ownership. Under the current guidelines, there is a 26 percent equity cap for foreign partners in an insurance company. There is a proposal to increase this limit to 49 percent. Premium rates of most general insurance policies come under the purview of the government appointed Tariff Advisory Commitee.

The opening up of the sector is likely to lead to greater spread and deepening of insurance in India and this may also include restructuring and revitalizing of the public sector companies. A host of private Insurance companies operating in both life and non-life segments have started selling their insurance policies since 2001.

Career as an Insurance agent

An insurance agent is a person who takes up agency from the insurance company to sell their policy on a commission basis. He acts as an intermediary between the insurance company and the policy holder. But before doing so, he has to undergo training and get a certificate of proficiency from the insurance company.

Mostly insurance policies are bought through agents. Agents help individuals and companies in selecting the right policy for their needs. They plan for the financial security of individuals, families and businesses and advise them about insurance protection. They also help the policy holders at the time of settlement of the claim. The job of agents is quite challenging as selling a product like insurance policy is not easy. For being successful, agents should be outgoing and social. They should have a knack of convincing people.

Agents are not on the payrolls of the insurance company. The insurance agents get a fixed commission on each policy they (insurance-agent) manage to sell

Eligibility and Process - People who wish to become insurance agents are required to undergo 100 hours of training by the respective insurance company. Once the training is complete, the candidate is eligible to appear for an online examination conducted by the Insurance Regulatory Development Authority (IRDA) with at least 50 per cent marks set for qualifying.

Composite Agent - is the one who sells both life and general insurance policies. One has to put in 100 hours promoting life insurance products assuming that you are a general insurance agent. A life insurance agent, before appearing for another exam, has to dedicate 50 hours towards promoting general insurance products. A composite agent has to appear for another test also (conducted by the IRDA.)The agent is supposed to renew his license after three years, by putting in another 25 hours (and 50 hours for composite insurance agent) of training. An agent can register under a development officer in any insurance company. The training institutes are accredited by the IRDA. and the insurance Company merely sponsors its agent(s). An agent works with the Development Officer in the insurance Company and the credit for the policy of the insurance agents goes to the Development Officers within the organization. Nevertheless, this job is as good as freelancing. Secondly, the insurance companies also provide incentive schemes for the insurance agents from time to time.


MUTUAL FUND MARKETING

A mutual fund is simply a financial intermediary that allows a group of investors to pool their money together with a predetermined investment objective. The mutual fund will have a fund manager who is responsible for investing the pooled money into specific securities (usually stocks or bonds). When you invest in a mutual fund, you are buying shares (or portions) of the mutual fund and become a shareholder of the fund.

Mutual funds are one of the best investments ever created because they are very cost efficient and very easy to invest in (you don't have to figure out which stocks or bonds to buy). By pooling money together in a mutual fund, investors can purchase stocks or bonds with much lower trading costs than if they tried to do it on their own. But the biggest advantage to mutual funds is diversification.

A Mutual Fund is a trust that pools the savings of a number of investors who share a common financial goal. The money thus collected is then invested in capital market instruments such as shares, debentures and other securities. The income earned through these investments and the capital appreciation realized are shared by its unit holders in proportion to the number of units owned by them. Thus a Mutual Fund is the most suitable investment for the common man as it offers an opportunity to invest in a diversified, professionally managed basket of securities at a relatively low cost. The flow chart below describes broadly the working of a mutual fund:

Mutual Fund Operation Flow Chart

Mutual fund advantage

Mutual Fund Investing vs. Stock InvestingIt seems strange to compare mutual funds to stocks since mutual funds are primarily composed of stocks, but it is important to distinguish the two because there are some notable advantages to using mutual funds.

Get Focused Investing in individual stocks can be fun because each company has a unique story. However, it is important for people to focus on making money. Investing isn't a game. Your financial future depends on where you put you hard earned dollars and it shouldn't be taken lightly.

Diversification There is no greater advantage to using mutual funds than diversification. Do you honestly believe wealthy investors purchase just a couple of stocks? Of course not! If they are not using mutual funds (many do), than they are purchasing a large number of stocks. Smart investors diversify because it greatly reduces risk without sacrificing returns.

Professional Management By purchasing mutual funds, you are essentially hiring a professional manager at an especially inexpensive price. It would be a bit cocky to think that you know more than mutual fund manager. These managers have been around the industry for a long time and have the academic credentials to back it up. Saying you could outperform a mutual fund manager is similar to a football fan sitting on their couch saying "I could have made that catch" -possible, but not likely.


Even if some of us are better at picking stocks than a professional and their support staff, most of us would not want to spend the amount of time it takes to watch, research and trade the market on a daily basis.

Efficiency By pooling investors' monies together, mutual fund companies can take advantage of economies of scale. With large sums of money to invest, they often trade commission-free and have personal contacts at the brokerage firms.

Ease of Use Can you imagine keeping track of a portfolio consisting of hundreds of stocks? The bookkeeping duties involved with stocks are much more complicated than owning a mutual fund. If you are doing your own taxes, or are short on time, this can be a big deal.

Liquidity If you find yourself in need of money in a short amount of time, mutual funds are highly liquid. Simply put in your order during the day and when the market closes a check will be sent to you or you can have it wired to a bank account. Stocks can be much more difficult depending on what kinds of stocks you are invested in. CD's offer no liquidity (not without a hefty fee) and bonds can be difficult, too. Some mutual funds also carry check writing privileges, which means you can actually write checks from the account, similar to your checking account at the bank.

Cost Mutual funds are excellent for the new investors because you can invest small amounts of money and you can invest at regular intervals with no trading costs. Stock investing, however, carries high transaction fees making it difficult for the small investor to make money. If an investor wanted to put in $100 a month into stocks and the broker charged $15 per transaction, their investment is automatically down 15 percent every time they invest. That is not a good way to start off!

Wealthy stock investors get special treatment from brokers and wealthy bank account holders get special treatment from the banks, but mutual funds are non-discriminatory. It doesn't matter whether you have $50 or $500,000, you are getting the exact same manager, the same account access and the same investment.

Risk In general, mutual funds carry much lower risk than stocks. This is primarily due to diversification (as mentioned above). Certain mutual funds can be riskier than individual stocks, but you have to go out of your way to find them. With stocks, one worry is that the company you are investing in goes bankrupt. With mutual funds, that chance is next to nil. Since mutual funds typically hold anywhere from 25-5000 companies, all of the companies that it holds would have to go bankrupt. I won't argue that you shouldn't ever invest in individual stocks, but I do hope you see the advantages of using mutual funds and make the right choice for the money that you really care about.

Mutual Funds Industry in India

The origin of mutual fund industry in India is with the introduction of the concept of mutual fund by UTI in the year 1963. Though the growth was slow, but it accelerated from the year 1987 when non-UTI players entered the industry.

In the past decade, Indian mutual fund industry had seen dramatic improvements, both quality wise as well as quantity wise. Before, the monopoly of the market had seen an ending phase; the Assets Under Management (AUM) was Rs. 67bn. The private sector entry to the fund familym rose the AUM to Rs. 470 bn in March 1993 and till April 2004, it reached the height of 1,540 bn.

Putting the AUM of the Indian Mutual Funds Industry into comparison, the total of it is less than the deposits of SBI alone, constitute less than 11% of the total deposits held by the Indian banking industry.


The main reason of its poor growth is that the mutual fund industry in India is new in the country. Large sections of Indian investors are yet to be intellectuated with the concept. Hence, it is the prime responsibility of all mutual fund companies, to market the product correctly abreast of selling.

The mutual fund industry can be broadly put into four phases according to the development of the sector. Each phase is briefly described as under.

First Phase - 1964-87: Unit Trust of India (UTI) was established on 1963 by an Act of Parliament. It was set up by the Reserve Bank of India and functioned under the Regulatory and administrative control of the Reserve Bank of India. In 1978 UTI was de-linked from the RBI and the Industrial Development Bank of India (IDBI) took over the regulatory and administrative control in place of RBI. The first scheme launched by UTI was Unit Scheme 1964. At the end of 1988 UTI had Rs.6, 700 crores of assets under management.

Second Phase - 1987-1993 (Entry of Public Sector Funds): Entry of non-UTI mutual funds. SBI Mutual Fund was the first followed by Can bank Mutual Fund (Dec 87), Punjab National Bank Mutual Fund (Aug 89), Indian Bank Mutual Fund (Nov 89), Bank of India (Jun 90), Bank of Baroda Mutual Fund (Oct 92). LIC in 1989 and GIC in 1990. The end of 1993 marked Rs.47, 004 as assets under management.

Third Phase - 1993-2003 (Entry of Private Sector Funds): With the entry of private sector funds in 1993, a new era started in the Indian mutual fund industry, giving the Indian investors a wider choice of fund families. Also, 1993 was the year in which the first Mutual Fund Regulations came into being, under which all mutual funds, except UTI were to be registered and governed. The erstwhile Kothari Pioneer (now merged with Franklin Templeton) was the first private sector mutual fund registered in July 1993.

The 1993 SEBI (Mutual Fund) Regulations were substituted by a more comprehensive and revised Mutual Fund Regulations in 1996. The industry now functions under the SEBI (Mutual Fund) Regulations 1996.The number of mutual fund houses went on increasing, with many foreign mutual funds setting up funds in India and also the industry has witnessed several mergers and acquisitions. As at the end of January 2003, there were 33 mutual funds with total assets of Rs. 1,21,805 crores. The Unit Trust of India with Rs.44, 541 crores of assets under management was way ahead of other mutual funds.

Fourth Phase - since February 2003: This phase had bitter experience for UTI. It was bifurcated into two separate entities. One is the Specified Undertaking of the Unit Trust of India with AUM of Rs.29, 835 crores (as on January 2003). The Specified Undertaking of Unit Trust of India, functioning under an administrator and under the rules framed by Government of India and does not come under the purview of the Mutual Fund Regulations.The second is the UTI Mutual Fund Ltd, sponsored by SBI, PNB, BOB and LIC. It is registered with SEBI and functions under the Mutual Fund Regulations. With the bifurcation of the erstwhile UTI which had in March 2000 more than Rs.76, 000 crores of AUM and with the setting up of a UTI Mutual Fund, conforming to the SEBI Mutual Fund Regulations, and with recent mergers taking place among different private sector funds, the mutual fund industry has entered its current phase of consolidation and growth. As at the end of March 2006, there were 29 funds.

Types of Mutual Funds Schemes in IndiaWide variety of Mutual Fund Schemes exists to cater to the needs such as financial position, risk tolerance and return expectations etc. The table below gives an overview into the existing types of schemes in the Industry.

Types of mutual fund schemes

By Structure o Open - Ended Schemes o Close - Ended Schemes


o Interval Schemes

By Investment Objective o Growth Schemes o Income Schemes o Balanced Schemes o Money Market Schemes

Other Schemes o Tax Saving Schemes o Special Schemes

Index Schemes

Marketing Mix for Mutual Fund

1. Product Design and RangeMutual fund products (schemes) are basically investments-oriented and the savings

mobilized by them are invariably invested in the instruments (shares, debentures) projected in the schemes. There is little scope for flexibility. Therefore, due care needs to be taken while designing particular products taking into account expected changes in capital/ stock market in view of future investments return. The changing profile of customers (investors) must be taken into account in identifying the savings market.

Different segments of the potential savings market have different expectations—long-term growth, regular income tax benefits, and so on. New products must be aimed at satisfying one or more objectives. Tax laws and other related regulations also play an important role in designing new products because benefits can be offered to investors within the existing framework of tax regulations.

India lags behind countries like the USA, the UK and Japan in terms of innovative products. Most of the products launched in India are either income or income-cum-growth schemes; few are pure growth schemes. Investor options have been restricted due to limited product range.

Like product planning, product launching is a crucial element in marketing. Many Indian mutual funds have performed poorly due to wrong timing of launch. Market research can help to assess the needs of potential customers, availability of existing products and future growth in demand.

Kinds of Mutual Funds

Mutual Funds have specific investment objectives such as growth of capital, safety of principal current income or tax exempt income, one can select one fund or any number of different funds to help one meets ones specific goals. In general mutual fund fall under 3 general categories: -

Equity fund invest in shares of common stocks. Fixed income funds invest in government or corporate securities, which offer fixed rate of

returns. Balanced fund invest in a combination of both stocks and bonds

OPEN ENDED SCHEMES: - Open-ended schemes do not have a fixed maturity period. Investors can buy or sell units at NAV- related prices from and to the mutual fund on any business day. These schemes have unlimited capitalization, open-ended schemes do not have a fixed maturity, there is no cap on the amount you can buy from the fund and the unit capital keep growing. These funds are not generally listed on any exchange. Open-ended schemes are preferred for their liquidity. Such funds can issue and redeem units any time during the life of schemes. Hence unit capital of open-ended funds can fluctuate on a daily basis. The advantages of open-ended schemes are: -

1. Any time exit option2. Any time enter option.


CLOSED ENDED SCHEMES: Close-ended schemes have fixed maturity periods. Investors can buy into these funds during the period when these funds are open in the initial issue. After that such scheme cannot issue new units except in case of bonus or right issue. However after the initial issue you can buy or sell units

of the schemes on the stock exchange where they are listed. The market price of the unit could vary from the NAV of the schemes due to demand and supply factor

AGGRESSIVE GROWTH FUNDS: - These funds seek to provide maximum growth of capital with secondary emphasis on dividend or interest income. They invest in common stocks with a high potential for rapid growth and capital appreciation. Aggressive growth funds are suitable for those investors who can afford to assume the risk of potential loss in value of their investment in the hope of achieving substantial and rapid gains. They are not suitable for investors who must conserve their principal or who must maximize their current income.

GROWTH FUNDS:- Like aggressive growth funds, growth fund generally invests in stocks for growth rather than income. They are considered more conservative in their approach because they usually invest in established companies to achieve long-term growth. Growth fund provides low current income but the investor principal is more stable then it would be in an aggressive growth fund. While the growth potential may be less over the short term, many growth funds have superior long-term performance records. These funds are suitable for growth oriented investors but not investors who are unable to assume risk or who are dependent on maximizing current income from there investments.

GROWTH AND INCOME FUNDS:- Growth and income funds seek long-term growth of capital as well as current income. The investments strategies use to reach these goals vary among funds. Growth and income funds have low to moderate stability of principal and moderate potential for current income and growth. They are suitable for investors who can assume some risk to achieve growth of capital but want to maintain a moderate level of current income.

FIXED INCOME FUNDS:- The goal of fixed income fund is to provide high current income consistent with the level of capital. Growth of capital is of secondary importance. Fixed income funds offer a higher level of current income than money market funds, but a lower stability of principal. Fixed income funds are suitable for investors who want to maximize current income and who can assume a degree of capital risk in order to do so.

EQUITY FUNDS:- Funds that invest in stocks represent the largest category of mutual fund. Generally the investment objective of this class of fund is long-term capital growth with some income. There are however many type of equity funds.

BALANCED FUNDS:- The Balanced funds aims to provide both growth and income. These funds invest in both shares and fixed income securities in the proportion indicated in their offer documents. It is an idea for investors who are looking for the combinations of income and moderate growth.

MONEY MARKET FUNDS/ LIQUID FUNDS: - For the cautious investors these funds provide a very high stability of principal while seeking a moderate to high current income. They invest in highly liquid; virtually risk free, short-term debt securities of agencies of the Indian government, banks and corporation and treasury bills. Because of their short-term investments, money market mutual funds are able to keep a virtually constant unit price; only the yield fluctuates. Money market funds are suitable for those investors who want high stability of principal and current income with immediate liquidity.

SPECIALITY / SECTOR FUNDS: - These funds invest in securities of a specific industry or sector of the economy such as health care, technology, leisure, utilities or precious metals. The funds enable investor to diversify holding among many companies within an industry, a more conservative approach than investing directly in one particular company. Sector funds offer a opportunity for sharp capital gains in cases where the fund’s industry is “in favor” but also entail the risk of capital losses when the industry is out of favor. While sectors funds restrict holdings to a particular industry, other specialty funds such as index funds


gives investors a broadly diversified portfolio and attempt to mirror the performance of various market averages.

2. Pricing PolicyThe price of mutual fund products is inextricably linked with returns. Indian mutual funds

follow the historic pricing structure. SEBI (Mutual Funds) Regulations, 1996, contain guidelines about the pricing of units. As per these guidelines, the schemes may also provide for the price at which the units may be subscribed or sold to the independent participants in the scheme and the price at which such units may at any time be repurchased by the mutual funds. Mutual funds are also to publish the sale and repurchase prices at least once in a week. Mutual funds are also to ensure that the difference between the sale and repurchase prices does not exceed 7 per cent of the sale price.

In India the face value of the units of most of the mutual funds is Rs 10. However, while deciding on the price, incentives, brokerage charges and commissions are also to be decided in advance because the expenses towards these items will effect the ultimate returns to investors.

3. Distribution and Promotion of ProductA new mutual fund product may have all the desired qualities but that does not ensure its

spontaneous acceptance by customers. Success would greatly depend on appropriate distribution and promotion. The identification of appropriate market segments for the product, selection of appropriate distribution channels and promotional aids are essential.

Till the advent of public sector mutual funds in 1987 and private sector mutual funds in 1993, the marketing strategy followed by UTI was largely passive. UTI units have been mainly sold through LIC agents whose job is really marketing insurance. Marketing intermediaries like agents/brokers in India, moreover, are under no obligation to follow any norms unlike the USA, UK and Japan.

While Indian mutual funds still depends mostly on retailing, a distinct change has been noted in marketing strategy after 1993.

The major market intermediaries are: agents appointed by respective mutual funds, stockbrokers who are members of stock exchange and are registered with the mutual fund, institutional and corporate agents.

Public sector mutual funds like LIC MF and UTI have an edge over others due to their well-established agency network. Though the corporate offices formulate the overall marketing strategy and co-ordinate the activities relating to publicity and product distribution, local level activities are supervised and coordinated by the zonal and branch offices. For example, UTI has four zonal offices and 44 branches; LIC MF has seven area offices. Other mutual funds also have regional offices, which promote sales at the local level.

Recent innovations in marketing aim to reach particular target groups. For example:

To market its income-cum-growth scheme in 1993 a bank-sponsored public sector mutual fund sent application forms to all the credit cardholders of the sponsoring bank. It is reported that about 10 per cent of the total collections came from the cardholders.

A public sector mutual fund, which launched a growth scheme in 1994 tied up with a foreign bank and the holders of credit cards of this bank, could pay for the initial subscription through credit cards.

Many mutual funds offer incentives for early subscriptions; some mutual funds also offer insurance benefits to attract investors.

An emerging trend is the distribution of schemes through merchant bankers. A number of funds have appointed lead managers to their schemes. The merchant bankers distribute the scheme through their booking wings that usually have wide network of sub-brokers.

Distribution of application forms through a tie-up with newspapers is also now a common practice.

Product promotion in India has taken the usual routes of advertisement and publicity. Mutual funds advertisements are regulated by SEBI, which prohibits materials and contents of publicity that may mislead the investing public.

Communication is important for effective marketing and communication through advertisement is the most important promotional aid for a mutual fund. Once the target group and its requirements are identified, an appropriate advertisement strategy is devised in order to


reach the maximum number of potential customers. Advertising campaigns must aim at creating awareness of the product, its comparative advantages and future potential, past performance of similar products and superiority of the fund in relation to others in terms of assets, management and performance.

4. Customer ServiceThe marketing of service is significantly influenced by the quality of service and the

interpersonal relationship between customers and the service organization. Servicing has great significance in mutual funds, as in any other financial service industry. Prompt and timely service as in issuing certificates/cheques and in attending to any customer problem would make a distinct difference. Expected rates of return being more or less same for all schemes, it is the quality of service that becomes the deciding factor. Services can be provided through external agencies, or internally through the service department. In India most mutual funds provide after-sales service through both external agencies and internal service department, although they largely rely on external agencies like registrars and transfer agents who are specialized in the job. Sometimes there are complaints that after-sales servicing are not up to the expectation level. This is probably due to absence of sufficient staff. However, mutual funds do need to develop in-house expertise to render after-sales services more promptly and cost effectively.

In order to ensure quality service to customers, service audit would be great help to monitor the range of services usually rendered by mutual funds. These are sales-related, complaint-related and suggestions-related services. Service standards can be fixed on the basis of expectations levels of customers, which can be found through market surveys.

Association of Mutual Funds in India (AMFI)

With the increase in mutual fund players in India, a need for mutual fund association in India was generated to function as a non-profit organisation. Association of Mutual Funds in India (AMFI) was incorporated on 22nd August, 1995.

AMFI is an apex body of all Asset Management Companies (AMC) that has been registered with SEBI. Till date all the AMCs are that have launched mutual fund schemes are its members. It functions under the supervision and guidelines of its Board of Directors.

Association of Mutual Funds India has brought down the Indian Mutual Fund Industry to a professional and healthy market with ethical lines enhancing and maintaining standards. It follows the principle of both protecting and promoting the interests of mutual funds as well as their unit holders.

The objectives of Association of Mutual Funds in India

The Association of Mutual Funds of India has certain defined objectives, which juxtaposes the guidelines of its Board of Directors. The objectives are as follows:

This mutual fund association of India maintains high professional and ethical standards in all areas of operation of the industry.

It also recommends and promotes the top class business practices and code of conduct which is followed by members and related people engaged in the activities of mutual fund and asset management. The agencies who are by any means connected or involved in the field of capital markets and financial services also involved in this code of conduct of the association.

AMFI interacts with SEBI and works according to SEBIs guidelines in the mutual fund industry.

Association of Mutual Fund of India do represent the Government of India, the Reserve Bank of India and other related bodies on matters relating to the Mutual Fund Industry.

·It develops a team of well-qualified and trained Agent distributors. It implements a programme of training and certification for all intermediaries and other engaged in the mutual fund industry.


AMFI undertakes all India awareness programme for investors in order to promote proper understanding of the concept and working of mutual funds.

At last but not the least association of mutual fund of India also disseminate information’s on Mutual Fund Industry and undertakes studies and research either directly or in association with other bodies.

Career as a Mutual Funds Advisor

The Association of Mutual Funds in India (AMFI) is an apex body of all Asset Management Companies (AMC) that are registered with the SHBI. AMFI develops a team of well-qualified and trained Agent Distributors. It implements a program of training and certification for all intermediaries and others engaged in the mutual fund industry including employees of mutual funds.

AMFI Mutual Fund Certification is based on a testing programme. There are two Modules of the test. The first is the AMFI Mutual Fund (Basic) Module. This is a general test covering the concept, structure and other essential general topics. This is meant for all employees of Mutual Funds (other than those who are engaged in selling and marketing activities), general public and for those who would like to have a basic knowledge of concept and working of Mutual Funds. Any one who desires to acquire knowledge of the functioning of the mutual fund without seeking to become a fund distributor can take part one test independently. A certificate will be issued separately for Basic Module test to the successful candidates. There is no validity period for the AMFI-Mutual Fund (Basic) Module certification.

The second is the AMFI Mutual Fund (Advisors) Module and it covers subjects such as financial planning, risks in fund investing, model portfolio selection in addition to the subjects covered under the Basic Module and constitute a single certification programme which is designed for certification of fund distributors or intermediaries engaged in selling mutual fund schemes, employees of corporate intermediaries and employees of mutual funds who are engaged in selling and marketing activities. The validity period for the AMFI-Mutual Fund (Advisors) module certification is for five years.

The Securities and Exchange Board of India (SEBI) has made mandatory for any entity / person engaged in marketing and selling of mutual fund products to pass AMFI certification test (Advisors Module) and obtain registration number from AMFI. Firms and corporates will have to obtain certification of registration from AMFI and all employees of corporate distributors engaged in selling and marketing of mutual fund products have to pass the AMFI certification test (Advisors Module) and obtain registration with AMFI before canvassing business of mutual funds.


TOURISM MARKETING

Introduction and Concept

Definition

Tourism is a temporary, short-term movement of people to destinations outside the places where they normally live and work. It involves travels and stay for temporary period to a place distant from the residence ranging from weekend to a few weeks or months.

Introduction:

Who is a Tourist?

Tourist is a temporary visitor to a country other than the one, which he usually resides for any reason other than following an occupation remunerated within the country visited.

The temporary period should not be less than 24 hours. There is a considerable cross border day traffic amongst many groups of neighboring countries. Such visitors are defined as Excursionist.

The Tourism IndustryThe tourism industry comprises of the following main and distinctive sectors:

Transportation Accommodation Tour operators Tourism Destination Operators/ Destination Management

FORMS OF TOURISM

Tourism is a generic term, which includes several types of travel and stay depending upon the motivations that impel people to move from place to another. The main purpose of travel is to determine the form of tourism. Following are the forms of tourism.

a. Domestic tourism/ Internal Tourism

b. International tourism/ External tourism

c. Holiday tourism-It has many forms. They are as follows.

Recreational tourism Health tourism Sports tourism Cultural tourism

d. Business travel –

e. Common interest tourism - It includes visitors who travel for specific purpose and objectives other than that of holiday and business. The return of people to the country of their origin labeled as Ethnic Tourism also falls in this category

Some Concepts :

Time Sharing: Vacation property ownership without the up-front cost of owning a property year round, you pay for the time you use. You may use your home resort every year or trade to thousands of other affiliated resorts worldwide.

The time-share market, across the globe, is approximately USD 6 billion industry at present and is growing at an average rate of 20 percent every year.

There are only 45,000 – 50,000 timeshare owners in India registered with the RCI. Reputed companies like Marriot, Hyatt, and Radisson etc are venturing into the time-share business.

Pilgrimage Tourism- It involves visiting various places of worship. Today more than 50% of the 9.2 million domestic tourists travel to such places. In 1998 more than 95 lakh people assembled at the Kumbh Mela, the largest and the last of its kind in the 20th century.


Beach tourism: India with its coastline of 7500 kms, offers some of the most exotic beach holidays in the world. India boasts of many beaches of Goa, Kovalam and Gopalpur. On the west coast, Lakshadweep offers a chain of coral islands and perfect beaches to the tourists. On the other hand, Orissa offers its ample golden and sunny beaches to the tourists. At the tip of the Indian mainland we have Kanyakumari.

Adventure tourism: India’s vast geographical diversity provides a vast potential for adventure tourism and also the prices here are very low. Travel agents offer packages for individuals and groups. Mountaineering, trekking, etc are some of the possibilities. There are sports like skiing, scuba driving, angling, wild life and bird watching, etc.

Features Of Tourism Product:

Each component of tourism is highly specialized and together makes the final product and cannot be provided by single enterprise.

Sales intermediaries like tour operators, travel agent and hotel brokers play a dominant role.

Demand for tourism is highly unstable due to seasonal, economic, and political factors.

Unique Characteristics Of The Tourism Industry

Inflexibility: The tourism industry is highly inflexible in terms of capacity. The number of beds in a hotel or seats on an airplane is fixed so it is not possible to meet sudden upsurges in demand. Similarly, restaurant tables, hotel beds and airplane seats remain empty and unused in periods of low demand. The seasonal nature of tourism activity exacerbates this problem. Offering attractive and discounted prices is strategy to overcome this problem.

Perishability: Tourism services are highly perishable. An unused hotel bed or an empty airplane seat represents an immediate loss of that service as a means of earning profit. This has an impact on overall industry profitability.

Fixed location: Tourism destinations are fixed locations so effort must be concentrated in communicating the facility to the potential consumer. A consumer can conveniently watch a Hollywood movie at the local cinema but has to be persuaded to travel to India to see the Taj Mahal.

Relatively Large Financial Investment: Every modern tourist establishment and facility requires large investment, frequently over a long time scale. This means that the level of risk and the rate of return are critically important to tourism management.

Tourism Services are high contact services, as people interact with people at virtually EVERY stage of the way. Tourism services are very people-oriented services, and the service people are plenty and have high contact with the consumers. The consumer interacts with a myriad of service people starting from when he books his ticket and throughout the course of his holiday.

Major players in tourism industry:

These players can be divided into 2

1. The ones, which take the local residents out of the country

2. The others, which get the foreigners into the country.

For eg: SOTC

SOTC floated a new package called “Brahman Mandal” aimed at Marathi speaking population and “Vishwa Darpan” aimed at Hindi speaking population of the country. This kind of segmentation will enable the companies to target effectively to boost their revenues. In fact, SOTC business improved substantially in Mumbai & Pune circles after the announcement of these separate packages.

Factors affecting tourism industry:


1. Cross border terrorism in Jammu & Kashmir

2. Terrorist Attack in April 1999

3. 11th September Attack on US

4. Gujarat riots

SWOT Analysis:

Strengths:

India a culmination of deserts, forests, mountains, beaches& it has a diversity of culture i.e. a blend of various civilizations & their traditions, a number of archeological sites & historical monuments.

Weaknesses:

Lack of adequate infrastructure & improper marketing of Indian tourism abroad.

Opportunities:

Growth of domestic tourism and special packages offered.

For eg: Thomas Cook says “Travel Now Pay Latter.” Affordable traveling at leisure, plenty of job opportunities.

Threats:

Economic conditions and political turmoil in other countries affects tourism. Aggressive strategies adopted by other countries like Australia, Singapore, in promoting tourism.

Current scenario:

Growth in domestic tourism in the country during the last one-decade 146 million tourist visits in 2000.

Tourism provides enormous opportunities for employment generation. 9.3 million in India for every 10 lakh invested in hotels/restaurants.

Future scenario:

The industry body, Confederation Of The Indian Industry (CII) has a vision for tourism in India called “Tourism Vision 2020” CII expects to host 40 million tourists by then & the tourism economy contributing Rs.1tn.

Problems:

1. Lack of Infrastructural facilities.

2. Lack of reasonable priced accommodation.

3. Tax burden for industry leaders. For eg: for every $ spent in India by a tourist he pays as much as 27% in taxes on average with figures going upto 35% in states such as West Bengal, but for other major global destinations the tax burden is only in the range of 4-8%

4. Along with expenditure tax, tourist has to pay service tax, sales tax, and luxury tax.

PEST Analysis of the Industry:

Environmental influences can be analysed by using the PEST analysis.

Political/Legal:

Political factors are the main driving force of the industry. Govt. support & co-operation to Indian Tourism Industry, railways and roads, hotel industry, airline industry, tourist operators. Downfall of tourism industry because of unconducive political environment eg Kashmir,

Legal:

Law is different for different country & is the major determinant for the industry. “Tax paid by tourists in India is the highest in the world. Indian hotels charge about 40% tax compared to other Asian countries where it varies between 3% and 6%".


Economic:

The criteria here is the more the people spend the more the industry grows. As we are concentrating on the International tourists, this has led to the tourism boom. Increase in spend has led to increase in the number of luxury hotels, & increase in air industry.

Social:

The general perception for tourism destruction of the social fabric of a place. The more the tourists coming at the place the more the risk of that place loosing its identity.

Technology:

Better technology in cheaper cost to remote and inaccessible area. It can help the country to get connected to the world. It is very much necessary to have better technology to have that place on world tourist

map. Frequent flights.

Various innovations in the tourism

Euro rail: Euro rail International is one of North America’s leading sources for European rail. The main feature is that it has a concept wherein a passenger can buy a single ticket and travel all over Europe without any stoppages as this railway line covers the entire Europe almost up to Russia.

Palace on wheels: This concept is very much prevalent in the state of Rajasthan where people come to experience the historical palace, and royal way of living. in this every thing is made available in the coaches of train so as to make the trip exciting.

Ring route: this is one plan in mass rapid transit system, which is being developed in thane district to make transportation better. It will be 16.2 Km long. This will help the commercial as well as the industrial sector. It will transport more economical, efficient and environment friendly.

Cruise liners: in this era people try different forms of travel cruise is one such, in India many cruise liners have come to existence like star, Virgo etc. and every Childs dream Disney cruise.

Safari: exploration of lesser-known area. Tourists are more attracted towards it as this gives them adventure. Safari is generally via road. There is some destination where one has to go by foot long distance.

Potential for growth of tourism

Although India is at the lowest ebb in international tourism (only 0.34% of global tourist traffic), there are several distinguishing features that would help in achieving its set goal. Some of these are given below:

The rate of growth in tourist traffic to India has been greater than the global average.

The average duration of stay of foreign tourist in India is one of the highest in the world. On an average, it exceeds 27 days in the case of non-package tourist and is 14 days in the case of package tourist.

The major share of the international visitors emanates from West Europe and North America.

The tourists on package tours spend nearly 65 per cent of their expenditure on shopping.

There is high degree of seasonality in the foreign tourist traffic.

The hotels and tourism related industry has been declared as a "High Priority Industry" for development.


Users of Tourism Services

The users of tourism services can be categorized in a number of ways.

One such way of classifying the users is by dividing them into categories such as General, Sex, Region, Education, etc.

General: Domestic, Foreign Kids, Teens, Youths, Seniors, Students, Executives, Artists Politicians, Movie stars

Sex: Men, Women Region: Rural, Urban Education: Literate, Illiterate Status: Rich, Poor Profession: Executives, Academics, Sportsmen, Artists Occupation: White collar, Blue collar

Another method of classifying users of tourism services is on the basis of the frequency of usage of services.

Non-users: They lack the willingness, desire and ability (income & leisure time). Potential Users: They have the willingness but the marketing resources have not been

used optimally to influence their impulse. Actual Users: They are already using the services generated by the tourist organizations Occasional Users: They have not formed the habit of traveling Habitual Travelers: They have formed a habit and avail of the services regularly.


The tourist organisations need to understand their behavioural profile which simplifies their task of creating and stimulating the demand. We know that users have values, perceptions, preferences, expectations which are the result of environmental influences. There are a number of factors influencing the behavioural profile, such as the race, ethnicity, religion, nationality, leisure habits, health factors, lifestyles, age, life-cycle-stage, occupation, level of incomes, advances in communication technologies or so. We find management increasingly using new techniques to understand how users react to marketing and other influences on their behaviour. It is in this context that we find it important to assess the behaviour patterns and users' characteristics. In the recent years, the users have become more discriminating in their using habits and therefore we find their needs for different services, products and brands changing constantly. This makes it essential that the marketers analyse their behavioural profile and come to know the levels of their expectations.

In psychological terms, the whole range of the generation of wants and their transformation into buying or using decisions can be explained as behaviour. The multi-dimensional environmental considerations-make the ways for generating a number of conflicting wants but it is difficult to transform all of them into effective demand. Thus, the core problem of the entire marketing process is to identify strategies bearing the efficacy of activating the transformation process so that a number of potential tourists are transformed into the actual tourists and further they prefer to be the habitual tourists. We can't deny the fact that the transformation process is activated by a number of factors. This raises the instrumentality of decision making model of a tourist. The various elements of this decision making model are flow of stimuli, opinion leaders, selector system, attitude, transformation of attitude into the behaviour and the feed back.

In a true sense, the transformation process is the transfiguration of attitudes into action. The marketers here are supposed to ensure the potential tourists that their attitudes are not to be destroyed. The relevant factors in the transformation process are the situational and organisational factors. The process remains incomplete unless the marketers make a microscopic study of feed back loop which helps in gauging the level of expectations or dissatisfaction. In the face of changing discretionary income, a change in the lifestyle and behaviour can't be ruled out. The life-style governs the level of expectations. If the lifestyle has been influenced by an increase in the discretionary income, it is natural that the level of expectations would remain high.


In view of the above, it is right to say that the marketing decisions can't be creative and proactive unless we have an indepth knowledge about the behavioural profile of users. The most important problem is to satisfy the tourists. We consider marketing a customer satisfaction engineering. The invention and innovations in the field of transportation and communications are to influence the process of innovation in the formulation of marketing mixes.

Arriving at creative marketing decisions is a challenging task that requires world class professional excellence. Manifestation of perfection in the purest form is an essential criterion to achieving excellence. All marketing activities concerned with goods or services, tangible or intangible start and end with customers/users. In the tourism industry, the professionals are required to see that users are unaware or aware, interested or intend to try, trier or experimental, occasional or the habitual. An expert says, "the individual specific behaviour in the marketplace is affected by internal factors, such as needs, motivation, perception and attitudes as well as by external or environmental influences, such as the family, social groups, culture, economic and business influences. Thus we find sociological, economic and psychological factors instrumental in influencing the behavioural profile of different categories of users.

While studying the behavioural profile of users of the tourism services, we find a study of lifestyle essential. The term lifestyle was originally coined by Mex Weber. It encompasses many of the sociological, cultural and psychological variables. William Lazer defines lifestyles as referring to a distinctive or characteristic mode of living in the aggregative and broadest sense of a whole society or segment thereof. From a sociological standpoint, Fieldman and Thielber define lifestyle in terms of four characteristics, viz. lifestyle is a group phenomenon, it pervades many aspects of life, it implies a central life interest and it varies according to sociologically relevant variables. It is right to mention here that lifestyle concept is neither a model nor a theory of consumer behaviour. It is rather an organisational concept for understanding many of the determinants and processes of behaviour. We find an in-depth study of lifestyle essential since it draws a variety of analysis together and a variety of discipline together and more so, it pervades many aspects of life.

A study of behavioural profile thus makes it essential that the tourist professionals serving different categories of tourist organisations are aware of the behavioural influences and based on the changing level of expectations of users/ prospects, they develop the marketing resources to make the process of influencing the behavioural profile cost-effective.

Product Planning and Development

To stay ahead of the competition, proactive tourism companies must constantly look for newproduct innovations. The traditional product life cycle theory indicates that typically a product will have a s-curve with stages of growth, maturity, saturation and decline in sales and profits. This theoretical model seems to hold true also for tourist products, which means that the question of product development and new- product innovations is important in tourism companies. It issometimes difficult to define what is meant by a new product. Improvements to an existing product can render that product so new as to make it seen by prospective purchasers as a genuinely new product, and if an existing product is launched to a new market or to other purposes, that product is also new for the customer.

In most cases the tourist products are advances on and modifications of existing products. The types of new product options vary from major innovations to minor style changes. Major innovations are new services for markets as yet undefined. Startup businesses consist of new services for a market that is already served by existing products that meet the same generic needs. New services for the currently served market represent attempts to offer existing customers a service not previously available from the company, although it may be available from other companies. Service line extensions represent augmentations of the existing service line, service improvements represent the most common type of service innovation.

Style changes represent the most modest service innovations, although they are often highly visible and can have significant effects on customer perceptions. The service management literature points out that new-product development in service industries should follow a structured planning framework. The fact that services are intangible makes it even more imperative for a new-product development system to have certain basic characteristics. The


development must be based on objective data about customer perceptions and market needs, not on the basis of managers’ or employees’ subjective opinions. Employees frequently are the service or at least deliver the service, which makes their involvement in new-product development highly important. Customers can help the design the service concept and the service process particularly in tourism businesses where the customer personally carries out a major part of the service process.

An underlying assumption of new-product development process models is that new-product ideas can be dropped at any stage of the process if they do not satisfy the criteria for success at the particular stage. The process can be divided into to sections: front end planning and implementation The front end determines what service concepts will be developed. The organisation is assumed to have an overall strategic vision and mission, which determine the new-product strategies of the organisation.

The first actual step in the new-service development (NSD) is the idea generation, which can besystematic search of new ideas. Typical sources of ideas may be formal brainstorming, solicitation of ideas from employees and customers, lead-user research, learning about competitors offerings etc. According to studies more than the half of the new-product ideascome from within the company, one quarter comes from customers and the rest mainly fromcompetitors.

During the idea generation a large number of ideas are often created. The purpose of screening the ideas is to reduce the number of ideas. The idea screening is the appropriate time to review carefully the question of product line compability. The key questions to ask when screening product ideas are, if there is a market for the product, if the product is a right one for the company product strategy and if the product can be produced profitably

A clear definition of the service concept should be the outcome of the service development and evaluation stage. The new service concept would then to be evaluated by employees and customers.

The next step is to determine the feasibility and potential profit implications. Demand analysis, revenue projections, cost analyses, and operational feasibility are assessed at this stage. The stagewill involve preliminary assumptions about the costs of hiring and training personnel, delivery system enhancements, facility changes and any other projected costs. Once the new service concept has passed all the front-end planning stages, the concept is ready for the implementation stages. During this phase, the concept is refined to the point where a detailed service blueprint representing the implementation plan for the service can be produced and tested by the personnel. The market testing phase is in tourism industry often implemented by introducing the new tourist product to a certain group of customers or representatives of intermediary stakeholders.

If the product has passed all the former stages the service goes live and is introduced to the marketplace (commercialisation). A very important phase is the post-introduction evaluation. At this point, the information gathered during commercialisation can be reviewed and changes made to the delivery process, staffing or marketing-mix variables.


Market Segmentation

The users of tourism services can be categorized in a number of ways.

One such way of classifying the users is by dividing them into categories such as General, Sex, Region, Education, etc.

General: Domestic, Foreign Kids, Teens, Youths, Seniors, Students, Executives, Artists Politicians, Movie stars

Sex: Men, Women Region: Rural, Urban Education: Literate, Illiterate Status: Rich, Poor Profession: Executives, Academics, Sportsmen, Artists Occupation: White collar, Blue collar

Another method of classifying users of tourism services is on the basis of the frequency of usage of services.

Non-users: They lack the willingness, desire and ability (income & leisure time). Potential Users: They have the willingness but the marketing resources have not been

used optimally to influence their impulse. Actual Users: They are already using the services generated by the tourist organizations Occasional Users: They have not formed the habit of traveling Habitual Travelers: They have formed a habit and avail of the services regularly.


Need For SegmentationConsumer behavior can be defined in psychological terms as the whole range of the generation of wants and their transformation into buying or using decisions. Users have values, perceptions, preferences and expectations, which are the result of environmental influences. There are a number of factors that influence the behavioral profile of consumers. In recent years, the users have become more discriminating in their using habits and therefore their needs for different services, products and brands change constantly. This makes it essential that the marketers analyze their behavioral profile and undertake segmentation so that they know the level of expectations.

In a nutshell, tourist organizations need to undertake segmentation in order to simplify their task of creating and stimulating demand. In this way they can identify the potential tourists, transform them into actual tourists and further into habitual tourists.

SegmentationThough there are a number of bases for segmentation of tourists, one of the most important is Lifestyle. Traveling decisions are fantastically influenced by changing lifestyles. They are also affected by other factors such as level of income, availability of leisure time, etc.

Such segmentation is useful when deciding the offerings to target a particular segment. For example:

The mass market consists of vacationers that travel in large groups and prefer all-inclusive tours. They are generally conservative.

The popular market consists of smaller groups going on inclusive or semi-inclusive tours. This group includes pensioners and retired people.

The individual market consists of chairmen, senior executives, etc.

As the lifestyle changes, consumption of services might change. For example, a newly married couple might prefer romantic holidays, but once they have children they would prefer family vacations where there are plenty of activities to entertain kids.

Teens and youth might prefer adventure holidays whereas senior citizens would probably prefer more relaxing vacations.

Marketing Mix

PRODUCT.

The panoramic view of the location, travel to the destination, the accommodation and facility as well as entertainment at the destination all forms the tourism product.

Components Of Tourist Product

BENEFIT MEANINGWITH RESPECT TO THE TRAVEL

AND TOURISM INDUSTRY

CORE BENEFITThe fundamental benefit or service that the customer is buying

Traveling

BASIC PRODUCTBasic, functional attributes Ticketing, hotel reservation

EXPECTED PRODUCT

Set of attributes/conditions the buyer normally expects

Customer friendliness, good food

AUGMENTED PRODUCT

That meets the customers desires beyond expectations

Prompt services, comfortable and convenient trip, spectacular sights, music

POTENTIAL PRODUCT

The possible evolution to distinguish the offer

Totally customized tour packages, A grade service at every stage

Transportation.


Without the transportation facility the attraction is of no use. The infrastructure and equipment are the components of transportation

Apart from the various components of tourist product, there are three levels of service package for tourist products and they are as follows:

Core product: comprises of essential need or benefit sought by customer. For e.g.: relaxation, fun, self-fulfillment etc.

Tangible product: comprises of the formal offer the product as set out in the brochure. For e.g.: inclusion of breakfast, facilities like television, swimming pool etc.

Augmented product: it expresses the idea of value added over and above the formal offer. For e.g.: free entrance tickets to local attractions, complimentary bottle of wine on arrival.

All these components help in identifying the images and perceptions of the tourist products as well as tourist organizations.

PRICE

The objective of pricing is to fetch a target market share, to prevent competition, and to take care of the price elasticity of demand.

Methods Of Pricing In Tourism Industry.

Cost based pricing: the price charged must be sufficient to cover fixed and variable cost to have a reasonable return on investment. Organization resort to price fixation at marginal cost to attract more customers.

Demand based pricing: refers to balancing costs and revenues. This pricing will suit to the seasonal characteristics as at peak times many leisure facilities have excess demand so firms use high price as tactic.

Competition based pricing: in case of new tourism product, if the strategic objective is market penetration, then prices must be set very competitive to attract more customers. In case of niche strategy, the price should portray this aspect complimented with additional benefits of the service offer.

PROMOTION

The promotion mix plays a vital role as the users of service feel a high degree of involvement and uncertainty about the product and their role in the buying process. The important aspects of promotion are advertising, publicity, sales support and public relations. Advertising the messages attractively and sales promotion activities in tourism can be effective when supplemented by publicity and personal selling. The word-of-mouth promotion is an important tool in tourism marketing. Apart from that, incentives to be given for a short period of time like price cuts, discounts, free gifts etc. and circulating brochures to the customers are also an important tool in tourism marketing.

PLACE

In most of the cases the tourist destinations may be natural, historical attractions. But, infrastructural facilities, transportation, communication are important for the development of a tourist center. Place or distribution management is concerned with two things – availability and accessibility.

To extend the number of sale or access, away from the location at which services are performed or delivered.

To facilitate the purchase of service in advance.

Different distribution strategies may be selected to reflect the company’s overall objectives. The tourist products are bought by the travel agent or tour operator. However, the late

Best mode of reaching the tourist is through internet. Ticket booking can be done through the internet and payment is made with credit card.


PEOPLE

We can’t deny the fact that sophisticated technologies have been successful in accelerating the pace of development. We also agree with this view that new generation of information technologies have simplified the task of decision makers. At the same time we also have to accept the fact that the sophisticated technologies can’t deliver goods to the development process if the employees operating and maintaining these technologies are not of world class. Technologies need due support of human resources who invent, innovate and develop technologies. Like other industries, the tourism industry depends substantially on management of human resources. The tourism industry is an amalgam of the services of a lot of people and hence this industry cannot work efficiently if the travel agents, tour operators and travel guides lack world class professional excellence. Of course the offices of travel agents depends on the new technology but after all employees and the other staff contribute significantly to the process. The travel guides need professional excellence since the projection of a positive image regarding a destination in particular requires their due cooperation, failing which even the world class services offered by the travel agents are found meaningless. The tour operators also need to manage human resources efficiently.

In the management of people, the related organizations are required to think in favour of developing an ongoing training program so that we find a close relation between the development of technologies and the quality of personnel who are supposed to operate and maintain the same. They need a lot of credentials to fulfill the expectations of the customers. The organization has to make the environmental conditions conducive and focus has to be laid on the incentives to the employees for energizing the process of performance orientation. Employee orientation requires due weightage to efficiency generation, value-orientation and perfection.

In the tourism industry the travel agents and the travel guides are the two most important people who speak a lot about the industry. Hence it is imperative that they have to be at their best at all times. Travel guides especially, are expected to have a lot of patience, good sense of humor, tact to transform the occasional tourists into habitual ones, thorough knowledge of the places, linguistic skills etc.

PROCESS

The operation process of the tourism firm will depend on the size of the tourist firm. The steps involved in the delivery of the tourist product are as follows:

Provision of travel information- refers to information regarding the travel is provided at a convenient location where the tourist seeks clarifications about his proposed tour.

Preparation of itineraries- it is composition of series of operations that are required to plan a tour

Liaison with providers of services-contracts have to be entered with the providers of services like transportation companies, hotel accommodation etc., before any form of travel is sold to a customer.

Planning and costing tours- the task of planning and costing the tour will depend on the tour selected as well as individual requirements.

New concepts in Tourism Industry:

Eco Tourism: Eco Tourism is an enlightening travels experience that contributes to the conservation of the eco system while respecting the integrity of the host communities.

Productivity /quality Productivity in services refers to how you transform the inputs into outputs, which are valued by the customer. Quality refers to the degree to which the service satisfies the customer by meeting their wants and expectations. Productivity and quality need to be omnipresent for the industry to complete its service obligations aptly. Only if your firm is productive and the quality meets the requirements of the customers can your performance be graded as excellent.

Here are five key things to consider when developing the performance strategy for your business.

Have you found a way to fit marketing into your schedule? Do you keep track of both your long and short-term projects (including marketing projects),

and review that list daily?


Do you have a way of combating procrastination and delay? Do you maintain the highest standards of integrity and excellence? Are you continually working to improve your skills in all areas of your business?

PROMOTIONIncludes advertising, publicity, Sales, public relations etc.

Creation of awareness has a far-reaching impact. The tourist organizations bear the responsibility of informing, persuading and sensing the potential tourists in a right fashion. The marketers need to use the various components of promotion optimally so that they succeed in increasing the number of habitual users. Promotion helps in maximizing the duration of stay, frequency of visit by offering new tourist products in the same country to areas, which hitherto have remained untapped or partially tapped. The various dimensions of tourism promotion are as follows:

Advertising: Advertisement helps in furnishing important information to the actual and potential tourists. Its coverage is wide. Advertising is aimed at the public to create awareness of the travel offers available on a resort and its attractions to influence their business decisions. Intangibility can be compensated with the help of visual exposure of scenes and events. We can project hotel bedrooms, well-arranged restaurants and cafeterias, swimming pools etc.

Publicity: It focuses attention on strengthening the public relations measures by developing a rapport with media people and getting their personalized support in publicizing the business. It helps in projecting the positive image of tourist organizations since the prospects trust on the news items publicized by the media people. Eg. Kumarakom in Kerala after Prime Minister A B Vajpayee’s visit. The publicity programme include regular publicity stories and photographs to the newspapers, travel editors, contact with magazines on stories etc. There are different groups in publicity, such as advertising publicity, projected publicity, structural publicity and personal publicity.

Sales promotions: Sales promotion measures are the short term activities seeking to boost sales at peak demand periods to ensure that the firms obtain its market share and are used to help launch a new product or support an ailing or modified one. The tool of sales promotions is designed to appeal particularly to those customers who are price-sensitive. There are a number of techniques to promote sale and the tourist professional need to use them in the face of their requirements vis-à-vis the emerging trends in the business. Eg. In the tourism industry, a travel company offers give-always to their clients, such as flight bags, wallets for tickets and Forex and covers of passport. The hotels offer a number of facilities like shoe shine clothes, first aid sewing kits, shower caps and shampoo. Further, the VIP clients also get fruits and flowers in their rooms.

Thomas Cook offered 3 tier sales promotion based on price and one more novel technique as detailed below:

Cook agreed to match the price of any holiday they sold which was known as price promise.

Money back guarantee to the clients who purchase the product or any tour operator known as trading charter.

Matching of customers need with a particular holiday known as formal guarantee.

A business travel challenge in which the details of expenditure on staff business travel booked through other agents over a 3 months period were submitted by companies to Cook, specially to calculate expected savings, provided the bookings are made through them.

Word-of-mouth Promotion: Most communication about tourism takes place by word-of-mouth information, which in a true sense is word-of-recommendation. In the tourism industry it is found that the word-of-mouth promoters play the role of a hidden sales force, which instrumentalize the process of selling. The high magnitude of effectiveness of this tool of promotion is due to high credibility of the channel, especially in the eyes of the potential tourists. The sensitivity of this tool makes it clear that tourist organizations need to concentrate on the quality of services they promise and offer. The marketers or the tourist organizations need to keep their eyes open, identify the vocal persons or the opinion leaders and take a special care of them so that they keep on moving the process of stimulating and creating demand.


Personal Selling: Personal Selling is based on the personal skill of an individual. The oral representation in conversation bears the efficacy of transforming the motivation into persuasion. The travel and hotel business depend considerably on the personal selling. The development of travel and tourism has been possible due to well-educated and trained sales personnel. The development of tourism business has been influenced by the services rendered by the travel agents and travel guides since they work as information carriers. Personal selling is the personal presentation of a tangible product or intangible services or ideas to the personal customers. It is important to mention that in the tourism industry, the personnel who attend tourists form an essential ingredient of the product, such as sales personnel are found responsible for dealing with customers behind the counter, the resort representatives cater to the need of tourists when they reach the destination etc. all of them play a vital role in ensuring that the tourism products satisfy the tourists. The phrase- the customer is always right applies specifically to the tourism industry. No reduction in price would compensate for impolite and indecent travel guide, a solvent waiter and a surly or a haughty coach driver. These facts are testimony to the proposition that the travel business is linked with the performance and behaviour of sales personnel or travel staff.

Telemarketing: it is a method of selling in which a professionally sound telemarketer expands the business. The quality of technology and the communicative ability of the telemarketers determine the magnitude of success of this component. In tourism, the travel agents, offices of airways, receptionist, and secretaries can’t work efficiently if the telephonic services are not up to the mark. This makes a strong advocacy in favour of recruiting a person considered to be professionally sound, personally committed sales personnel having an in-built creativity, innovation and imagination.

PHYSICAL EVIDENCE It is a very important factor for the travel and tourism industry. This marketing p is important in 2 distinct ways:

1) as the environment in which the sales takes place 2) the environment where the product is consumed

Explanation of the first caseWhen the purchasing of the product is taking place, however the customer cannot be sure whether they will enjoy the product or not. In the mean time their expectations and emotions are influenced by factors like layout of the room, the furniture, noise level, temperature, lights and other factors like the brochure of the company. In case of customers who by electronically the appearance of the website is the physical evidence.

Explanation of the second case In the travel industry where the product is being experienced s particularly important in securing repeat business thus extensive facilities that prove to be physical evidence are provided to lure and woo the customer The tangibles include flat beds in business class, Wi-Fi connection in hotels, customized meals on board, tele checking 8hrs booking in hotels, hotels providing laptops on request, internet access as complimentary for the corporate packages.

The critical incidences in this process are Understanding the customers needs and expectations from the holiday or business tour

which ever he or she is opting for Making an apt travel plan and route adhering to the requirements of the customer

Execution of the planned itinerary is the most critical one. As a company has committed some thing and this is the time when the customer is actually experiencing the entire product and if any one of the commitments don’t materialize then the zone of tolerance is affected and lot as it is already low because the customer on a tour whether leisure or business expects perfection.


EDUCATION MARKETING

Innovative Education: Introduction and Concept:

Education is now a global product with institutions worldwide competing for students and finding ever more creative ways to satisfy student needs and preferences. With the continuing rise in the preference for flexible distance learning, educational institutions are finding that when students and faculty have significantly different cultural backgrounds and learning styles that the expectations of the learning experience can be unfulfilled.

The marketing of education is a controversial issue. Although the opinions on the signification of the educational institution as a product and the students as the customers still remains arguable the transformation of the instruction process as a student-based model requires the utilization of the marketing opportunities are used. Teaching has been increasingly developed as a learner-centered model, shaping the process as a life-long learners experience to match their existing knowledge and skills is crucial.

In the marketing approach the needs and desires of the customers are given a primary and major importance so they are treated as “kings”. When this strategy is employed in distant education the course programs and materials are observed to be shaped in accordance with the needs and desires of the students and multimedia use are also observed to be very common with these are presented within the most appropriate channels to the students. The customer “king” transforms into the student “king”.

Marketing is about achieving organizational goals and these are determined by the values of the organization (its “culture”) and shape its decision-making.

Education in India

India has been a major seat of learning for thousands of years. While some of the country's universities (BITS, NSIT, ISB, IITs,BHU,IIITs, NITs, IISc, TIFR, ISI, IIMs,AAFT, AIIMS) are among the world's well-renowned, it is also dealing with challenges in its primary education and strives to reach 100% literacy. Universal Compulsory Primary Education, with its challenges of keeping poor children in school and maintaining quality of education in rural areas, has been difficult to achieve (Kerala is the only Indian state to reach this goal so far). All levels of education, from primary to higher education, are overseen by the Ministry of Human Resource Development (Department of Higher Education (India) and Department of School Education and Literacy), and heavily subsidized by the Indian government, though there is a move to make higher education partially self-financing. Indian Government is considering to allow 100% foreign direct investment in Higher Education.

Various Stages of Education in IndiaThere are broadly four stages of school education in India, namely primary, upper primary, secondary and higher secondary (or high school). Overall, schooling lasts 12 years, following the "10+2 pattern". However, there are considerable differences between the various states in terms of the organizational patterns within these first 10 years of schooling. The government is committed to ensuring universal elementary education (primary and upper primary) education for all children aged 6-14 years of age. Primary school includes children of ages six to eleven, organized into classes one through five. Upper Primary and Secondary school pupils aged eleven through fifteen are organized into classes six through ten, and higher secondary school students ages sixteen through seventeen are enrolled in classes eleven through twelve. In some places there is a concept called Middle/Upper Primary schools for classes between six to eight. In such cases classes nine to twelve are classified under high school category. Higher Education in India provides an opportunity to specialize in a field and includes technical schools (such as the Indian Institutes of Technology), colleges, and universities.

In India, the main types of schools are those controlled by:


The state government boards like SSLC, in which the vast majority of Indian school-children are enrolled,

The Central Board of Secondary Education (CBSE) board, The Council for the Indian School Certificate Examinations (CISCE) board, National Open School and "International schools." These schools mimic the schools in the West in pattern and

syllabi and are considerably more expensive than regular schools. The exams conducted have the syllabus of anyone of the above-mentioned Councils or Boards.

Preprimary EducationPreprimary education in India is not a fundamental right, with a very low percentage of children receving preschool educational facilities. The largest source of provision is the so called Integrated Child Development Services (or ICDS), however, the preschool component in the same remains weak. In the absence of significant government provisions, private sector (reaching to the relatively richer section of society) has opened schools. Provisions in these kindergartens is divided into two stages- lower kindergarten (LKG) and upper kindergarten (UKG). Typically, an LKG class would comprise children 3 to 4 years of age, and the UKG class would comprise children 4 to 5 years of age. After finishing upper kindergarten, a child enters Class 1 (or, Standard 1) of primary school. Often kindergarten is an integral part of regular schools. Younger children are also put into a special Toddler/Nursery group at the age of 2–2½. It is run as part of the kindergarten. However, creches and other early care facilities for the underprivilaged sections of society are extremely limited in number.

Elementary Education During the eighth five-year plan, the target of "universalizing" elementary education was divided into three broad parameters: Universal Access, Universal Retention and Universal Achievement i.e., making education accessible to children, making sure that they continue education and finally, achieving goals. As a result of education programs, by the end of 2000, 94% of India's rural population had primary schools within one km and 84% had upper primary schools within 3 km. Special efforts were made to enroll SC/ST and girls. The enrollment in primary and upper-primary schools has gone up considerably since the first five-year plan. So has the number of primary and upper-primary schools. In 1950-51, only 3.1 million students had enrolled for primary education. In 1997-98, this figure was 39.5 million. The number of primary and upper-primary schools was 0.223 million in 1950-51. This figure was 0.775 million in 1996-97.

In 2002/2003, an estimated 82% of children in the age group of 6-14 were enrolled in school. The Government of India aims to increase this to 100% by the end of the decade. To achieve this the Government launched Sarva Shiksha Abhiyan.

The strategies adopted by the Government to check drop-out rate are:

Creating parental awareness Community mobilization Economic incentives Minimum Levels of Learning (MLL) District Primary Education Programme (DPEP) National Programme of Nutritional Support to Primary Education (Mid-day Meals

Scheme) The 86th Constitutional Amendment Act was passed by the parliament to make the Right

to Elementary Education a fundamental right and a fundamental duty. National Elementary Education Mission A National Committee of State Education Ministers has been set up with the Minister of

Human Resource Development as the Chairperson of the committee. Media publicity and advocacy plans.

However, the poor infrastructure of schools has resulted in fairly high dropout rates. Thus, according to the DISE 2005-6 data 9.54% of the schools remain single classroom schools and 10.45% schools lack classrooms. The average pupil teacher ratio for the country is 1:36, with significant variations to the upper end and 8.39% schools are single teacher schols and 5.30%


schools have more than 100 children for each teacher; 30.87% schools lack female teachers. Only 10.73% schools have a computer.

While the education system has undoubtedly undergone significant progress, a lot still needs to be done to enhance the learning of children from scheduled caste (or Dalit) families, scheduled and primitive tribes and religious minorities. Girls' enrollment continues to lag behind that of boys.

Non-graduation market

While availability of primary and upper primary schools has been to a considerable extent been created, access to higher education (especially in rural areas) remains a major issue in rural areas (especially for girls). Government high schools are usually taught in the regional language, although some (especially urban) schools are English medium. These institutions are heavily subsidised. Study materials (such as textbooks, notebooks and stationary) are sometime but not always subsidised. Government schools follow the state curriculum. There are also a number of private schools providing secondary education. These schools usually either follow the State or national curriculum. Some top schools provide international qualifications and offer an alternative international qualification, such as the IB program or A Levels.

Higher EducationHigher education in India has evolved in distinct and divergent streams with each stream monitored by an apex body, indirectly controlled by the Ministry of Human Resource Development. and funded by the state governments. Most universities are administered by the States, however, there are 18 important universities called Central Universities, which are maintained by the Union Government. The increased funding of the central universities give them an advantage over state competitors.

The Indian Institutes of Technology were placed 50th in the world and 2nd in the field of Engineering (next only to MIT) by Times Higher World University Rankings although they did not appear in the Shanghai Jiao Tong University Academic Ranking of World Universities. The National Law School of India University is highly regarded, with some of its students being awarded Rhodes Scholarships to Oxford University, and the All India Institute of Medical Sciences is consistently rated the top medical school in the country. Indian School of Business, Hyderabad and the Indian Institutes of Management (IIMs) are the top management institutes in India.

The private sector is strong in Indian higher education. This has been partly as a result of the decision by the Government to divert spending to the goal of universalisation of elementary education.

Strategies for Education Marketing

It is the explicit recognition of the tensions between old and new learning styles which our paper seeks to highlight as the basis for attaining a marketing advantage. To allow students to learn in styles that commence with recognition of diverse foundations provides an environment where students are given greater opportunity for academic success. The view that all students can be blended into one learning environment as though one stylized type of pedagogy would be suitable for all students in a mixed cohort, presumes that a standardized approach to learning is indeed appropriate.

The concept of ‘one size fits all’ education may have been appropriate in old economies where students represented a homogenous group from the same cultural group with a known entry level skill set. Where students do not fit this form of stereotyping it makes sense to approach the task of designing an appropriate learning environment that suits the majority of learners.

Indeed, the arrival of technologies to supplement, enable, enrich and mediate learning experiences challenges traditional education pedagogies. To actively respond to such pressures in a way that is positive can contribute to academic outcomes. Businesses and governments have


called into question the relevance and quality of the education that has been provided by post-secondary institutions as well as their continued ability to deliver education in a manner that thenew forces of the globalizing marketplace would deem efficient.

In most education systems, students can express their preferences through their choice of universities, choice of courses within the university or perhaps even their combination of modules within a degree. The bone of contention, however, is the assumption that having made that choice, the students should defer to the expertise of the deliverer.

Marketing mix for Adult Education

Product Mix

No doubt, the word "literacy" focuses on the knowledge of alphabets but keeping in view the changing needs of society and economy, it is pertinent that we change the perception. Unless we have a right perception of the subject, the service mix cannot be formulated in a right fashion. To frame a time honoured syllabi, it is essential that we are well aware of the target. In modern society, an individual cannot protect his/her existence unless he/she is well aware of the fundamentals. Mechanisation of agriculture and domination of hi-tech driven industrial economy make it essential that we assign due weightage to the functional literacy and integrate the same with the formal education. It was against this background that way back in 1972, the UNESCO Tokyo Conference had suggested integration of adult education with the formal education.9 This helps a person to develop the faculty to thrive even in a rough weather. So far as the adult education is concerned, the functional literacy can solve our problem but here it is significant that we blend even the informal education in the product mix or service mix. We go through elementary education exclusively since educational facilities for kids and children need an innovative approach, a new vision. We club child education or elementary education under the head marketing literacy since our literacy percentage is substantially contributed by them.

Thus to market the literacy programme for adults, at the outset we go through the service mix which helps adults in capitalising on the opportunities. Since they bear the responsibility of contracting the unemployment problem, it is essential that right from the knowledge of alphabets to the imparting of vocational education, we do not underestimate the recent developments in the modern society. They should have a fundamental knowledge of the subject in tune with their aptitude. Besides, the service mix needs to assign due weightage to the informal education. This would pave ways for work culture vis-à-vis the organisational culture. In Figure 11.1, we find a plan to formulate the product mix/service mix by the agencies involved in the process of promoting adult education. We find two important areas for adult education, e.g., formal and informal. In the formal education, the participating agencies are supposed to develop knowledge in tune with their aptitude. This would help adult literates in contributing to the process of making a sustainable society. The illiterates in this process are only not given the knowledge of alphabets but in addition, the functional education becomes an important part of the same. At this stage, they get a basic knowledge of the subjects and after this, the knowledge is developed in tune with their aptitude, specially to develop expertise in the face of changing environmental conditions. A fair blending of formal and informal education transforms the unproductive adult illiterates into a productive human capital. If we educate adult illiterates (women), we educate a family and keep on the circle of human capital formation moving forward. In addition to the central and state governments, a number of social organisations are also engaged in the process of removing adult illiteracy. Besides, UNESCO has also been supporting national agencies in the very context. Despite of huge investments and extensive efforts to eradicate illiteracy, we are lagging far behind USA, Canada, Japan, Switzerland, France, Netherlands, Australia, UK where the rate of adult literacy is 99 per cent. What to talk of developed countries even we are much behind Sri Lanka where it is more than 88 per cent.10 The need of the hour is to improve the result, to make the human resources productive, to accelerate the rate of human capital formation and to transform the liabilities into assets.

Promotion Mix


Promotion is considered to be the most sensitive mix of marketing which helps transformation of marketing policies and strategies into the meaningful actions. The participating agencies here bear the responsibility of informing and motivating the users (adult illiterates) in such a way that the turn-up ratio is increased considerably. The agencies to be more specific in the rural areas find it difficult to promote the literacy programme since the prospects do not evince their interests. This draws our attention on creativity in the promotional decisions. For influencing the rural prospects, we find the instrumentality of audiovisual exposure of high magnitude and it is therefore the AIR and DD-I and other private TV channels are supposed to play here an effective role. The advertise merit decisions need here an intensive care. The advertising agencies, media and the professionals engaged in the advertisement business have to make the adult literacy programmes more sensitive. The slogans, messages, appeals if positive, can make the advertisement programmes more effective. The professionals engaged in designing advertisement layouts, composing slogans, preparing TV serials or radio dramas should have an in-depth idea of the target prospects. The selection of characters and events also play here an important role. The cine artists or TV stars found more popular in the religious/devotional serials and movies have been found throwing positive impact on the rural prospects in particular. The media, TV channels are supposed to allot the duration/time of televising a particular programme in the face of prospects. We cannot negate that after mid-1980s and to be more specific during 1990s, TV has gained popularity even in the rural areas. National Literacy Mission has been found advertising through AIR/DD-I.

It is not to be forgotten that for promoting adult literacy, the voluntary social organisations have also been instrumental. Since the audio-visual medium has been more effective, the concerned organisations should prefer TV/radio for advertising the messages, slogans or serials/tele film. The professionals are not supposed to forget that rural prospects in particular are not so receptive. Against this background they need to prepare a programme based on extensive research. The motive is to influence the prospects who are insensitive. To seek public participation in the activating process, it is also essential that we advertise in the popular daily newspapers. The songs and drama division of the central government, other drama/art centres/animation film, puppet show, folk songs etc. are found more effective to sensitise the less receptive prospects. A vital task before the professionals is to motivate the rural women prospects. We expect something concrete from the creative advertisements. Aggressive advertisement strategy would be highly effective to influence the rural women illiterates.

The participating agencies, organisations, institutions are also supposed to develop rapport with the media to publicise their programmes. Such type of publicity would activate the process of brain-washing. In addition, this would also make the literacy programmes cost — effective.

National Literacy Mission, since its inception in 1988, has been successful in making a number of persons literate under Adult Education Scheme. The publicity materials of NLM are no doubt of good quality but the main hurdle to motivate the prospects is yet to be crossed. In addition to advertising and publicity, we should also think in favour of promotional incentives to prospects in general and rural women prospects in particular. The teachers and personnel engaged in the process are also required to be given due incentives. We have ; target of total literacy by 2005 but the existing promotional strategies would hardly be helpful in touching the target within the stipulated time. This in a natural way draws our attention on aggressive promotion strategy. We need enormous cooperation of media to promote adult literacy programme. The voluntary social organisations, no doubt, can be successful in activating the proc but even to simplify their task, the promotional decisions are required to be innovated. Fortunately, we have sophisticated communication technologies and an efficient team of professionals in different areas. The only thing that we need urgently is a strong sense of dedication and commitment without which our all efforts are likely to be turned into a fiasco.

The advertising agencies bear an important task of making creative advertisements. Creativity remains the enigma to most people. It is a complex process whose sensitivity depends upon the forces within the individual and outside. It is hot just a gift. We can even inculcate the creative faculty. It is a range of abilities. It is both convergent and divergent thinking which responses to reality and thus succeeds in making the appeals positive. It bears the capacity to sensitise even insensitive persons. It is against this background that we find creative advertisements more instrumental in turning the negative into positive. Since the prospects (adult illiterates) are found generally less receptive, it is pertinent that while composing slogans, messages and appeals, the professionals attempt at making the advertisements more creative. To be more specific the rural


adult illiterates and specially the women fail to understand the slogans and messages, symbolic photographs or paintings. The professionals, if are found familiar with the lifestyles of target prospects, can be successful in motivating them. It is not to be forgotten that in developing advertisements the most significant aspect is visualisation. It is a process right from the designing of advertisements to the development of advertisement layout in print. It is related to art in advertising. This process is shared by the copywriter and the creative director of visualisation. Here, the professionals take a decision regarding the point or scene to be high-lighted.e.g., product, people, event, background. We need more care while developing advertisements since both the subjects and prospects may be instrumental in generating monotony. How to design creative layout so that the locomotion process is right and the viewers are motivated to see, receive and act in the desired direction. Unless we find literacy programme activated as a social mission, our efforts would show a lukewarm response. National Literacy Mission established its edge over the National Adult Education Programme (1978) and let the Social Literacy Mission establish its edge over the National Literacy Mission (1988).

Place Mix

Even the plans, policies and strategies are innovative, a small gap or a minor mistake in distributing the services may turn positive into negative. This necessitates an intensive care on channelising the educational services for adult illiterates at almost all the levels. To be more specific for adult women illiterates, A need to adopt a channel with the minimum possible gap between the funding agencies an d the ultimate users. To be more specific at the last level of distribution, we need more precaution since the teachers or the front-line staff making available educational aids or back-up or supporting materials to the users are supposed to be more sensitive. We may have permanent or part-time teachers for this purpose and keeping in view their contributions, the salary, honorarium or perks or other incentives are to be offered to thern. While channelising the services, it is advisable to make it small. This would also be helpful in minimising the cost and time of distributing the educational aids. Willingly or unwillingly, we accept that in the Indian condition, the most sensitive segment of the users, women illiterates particularly living in the rural areas fail in getting the teaching aids and other incentives meant for them since the sore-spots and a big gap in the channels stand as a barrier.

The related organisations or agencies should have a direct link with the adult education centres so that they distribute the services to the target users without delaying the process. The related organisation should circulate a guideline for utilisation and the centres (AECs) should follow the same. There must be a general guideline regarding the service mix for the adult education and in addition, for rural areas and rural women we should have a special task force. This is a special segment and for the same we need a special strategic marketing. In a majority of the villages, we find that rural women due to shyness and their family tradition do not like to come out which stands as a major barrier. We have talked about special visualisation scheme for this purpose while going through promotion. Our front line personnel need an in-depth study of behaviour so that they understand the psychology of target prospects and attempt to motivate them.

For educating the women illiterate, we should take the support of women front-line staff, preferably of the same village. This would only not remove the problem of shyness but would also make possible personal touch in service. We should fix individual-target and group-target and the front-line-staff crossing; the target should be given due incentives. At the last stage of their education when they are supposed to cover vocational courses, we need the support of experts. If we assign to them the course in the face of their aptitude, the sensitive rate would be high.

Price Mix

Since we propose to eradicate this social evil, the holistic concept is found -ere more pragmatic. We find least scope for mobilising funds from the internal sources and therefore the funding process would be strengthened by collecting grants, aids, charity and donations. At the last stage of faculty/knowledge development, we find some scope for charging nominal fee but to activate the process, we would prefer free-of-cost services. This would help us in touching the target of Total Literacy (TL) by 2005 AD. Of course, we can argue that if particularly at the second and third stage of education, they are in a position to earn something, a small portion of same should be paid by them as fee to promote the literacy programme. Since the programme is meant for the adult illiterates, they should lies their moral responsibility.


Marketing mix for Elementary Education

Since elementary education system has been contributing substantially to the overall literacy rate, we find justification for discussing the marketing of elementary education under the head marketing literacy. Of course, during the Eighth Five Year Plan (1992-97), we have given an overriding priority to Universalisation of Elementary Education (UEE) but till now the results are disappointing. In this education system, we find two categories, formal and informal. In the formal education, we find two levels, e.g., primary and upper primary. We are aware of the fact that both the government and private schools are involved in the process. The main problem in the elementary education is the drop-out ratio. A number of parents discourage their children and even the teachers fail in motivating them, resulting into a poor retention-ratio jeopardising all our efforts to develop quality outputs. We cannot deny the fact that to be more specific in the rural areas, the government schools are almost all in a depleted condition. Students have neither a suitable*" space nor a dedicated teacher. No doubt, we find an increase in the enrolment position but if the retention-rate is not improved, the enrolment rate would not serve our purpose. If we talk about the rural areas, willingly or unwillingly we have to accept that the results are very disappointing. Even today 95 per cent of rural population have a school within a distance of 3 kms and above. The system is meant for children above 5 age-group and therefore we can easily imagine the fate of enrolment. In addition to the revamping of government schools, we have to encourage private schools so that a competitive condition makes ways for qualitative transformation.

Product MixThe changing environmental conditions determine the syllabi/curriculum for any educational system or organisation. Since it is a learning stage and therefore we cannot under estimate various dimensions of informal or non-formal education. While formulating mix and blending formal and informal education, it is significant that we pave ways for its further link with the secondary education system which would engineer a sound foundation for higher education. To make possible a contraction in the drop-out ratio or to increase the retention ratio, we need to make the curriculum more interesting. Since both the public and private sectors are involved in the process, it is essential that the services are made competitive. This would help users/students in many ways

We have a tough task to make our human resources internationally competitive. This is possible when we make our products more costly. By having a fair synchronisation of professional excellence and value engineering or say in the beginning the blending of fundamentals and values, we pave ways for the development of their personalities. The productive human resources would pave ways for the development and prosperity of an organisation and vice-versa. We cannot ignore the fact that the secret of Japanese developments are coiled in the essence of developing productive human resources. The image of an organisation is fantastically influenced by the quality of human resources. The elementary education is considered to be the most sensitive stage for engineering a sound foundation for the development of human resources.

This draws our attention on the visualisation process so that they complete the first stage at the earliest possible. The primary stage of education would make them understandable, if sophisticated communication technologies are used. After this, at the upper-primary stage, we need to study their aptitude and based on the same, the fundamentals of the related area are to be made available to them. It is in this context that we find aptitude test significant to increase the effectiveness of our mission. Here, it is important to mention that while designing the syllabi or developing the curriculum, we should not forget the constraints that we find in the rural areas and the handicaps that we find with the rural children. Against this background, we should have a crash programme for brushing-up the rural children which would be helpful in removing the threshold barrier. Though they have the potentials still due to shyness or lack of exposure, they tail in delivering goods and make our programmes unproductive. The crash programme or special curriculum should be after the primary education.

Not only the formal but even we need to blend informal or non-formal education in our curriculum. Here our emphasis is on social, cultural and ethical values by activating the brain-washing process. Since of late we have sophisticated communication technologies, the task is not so difficult. In Figure 11.3, we find civic sense, culture, ethics, national excellence as the key


components c£ informal education. Our emphasis is here on value engineering. This is a value-addition process in which we are supposed to be more careful.

We cannot expect policy makers, decision makers, white-collar personnel, blue-collar personnel, teachers, politicians, technocrats and others making value-based decisions till these traits are injected or inculcated in their personalities essentially at the learning stage. We find children more receptive. And it is also right that due to psychological factors they receive negative traits very quickly. If they do not get knowledge of these components at the stage of elementary education, it is very difficult to inculcate these traits at the later stage. Of late, we find an adverse condition. The parents in a good number do not realise these traits essential for the development of their personalities. They along with their kids, teens are found watching TV serials/ movies full of violence and bedroom scenes. They themselves do not act and behave in the face of pop culture. The children do not get proper education regarding these traits in their schools. In the prevailing condition, it is not right to expect from our new generation to be value based. It is against this background that we strongly feel inclusion of informal education in our curriculum.

Promotion Mix

Educating children is not a programme but a mission. Significant developments around the world make it essential that we innovate curriculum, make them interesting vis-a-vis thought provoking. The significant task here is to innovate the promotional strategies so that we succeed in creating awareness and increasing the enrolment and retention ratios. We are required to focus on two important areas, first to instrumentalise the personal promoters and second to innovate the non-personal promotional measures bearing more sensitivity. To be more specific in the rural areas, we have to be more careful since the parents are often found discouraging their children from going to schools. By educating' children we not only succeed in increasing the rate of literacy but also engineer a sound foundation for the development of productive human resources contributing to the process of human capital formation substantially and activating the development processes fantastically. It is against this background that we find promotional decisions playing an important role in strengthening elementary education.

The first task is found more impact generating since we find here the instrumentality of human resources. Our emphasis is here on the involvement of teaching and non-teaching personnel in motivating the children and their parents. For motivators playing a significant role in the motivating process, it is pertinent that they are getting adequate incentives. Hence, it is important that teachers get due incentives. It is also important to mention here that their incentives should be linked to enrolment and retention ratio. There must be a target and the teachers crossing the target should suitably be rewarded. On the other hand, the teachers failing in touching the target should be deprived of the additional incentives. Since the parents are also found here responsible for the in-creasing drop-out ratio, it is judicious that we think in favour of motivating the parents. This is related to personal promotion since it is instrumentality personal promoter that determines the magnitude of success. We can not negate that in the rural areas we need a special task force to motivate the parents. If we fail in the motivation process, we have no option but to punish those parents found responsible for discouraging their children. In this context, we need : assign due weightage to the behavioural dimension since it would help teacher in sensitizing the motivation process.

The second task is related to non-personal promotion where we focus cm advertisement and publicity measures. In the modern world, we have sophisticated technologies and sensitive media to make our slogans more effective. To be more specific, TV/audio-visual exposure need here a special mention. The government and private agencies evincing interests in this mission should come forward and contribute a lot to the advertising process. The professionals can play here an important role by making the slogans, messages, appeals proactive. Since it is a mission, they should work with the motto of subserving the social interests or should charge the minimum possible for the services they make available. The visualisation process needs due weightage, specially while designing the advertisement layout. Like AIR and DDI, other private TV channels should also evince interests in advertising slogans related to child education. They should charge nominal, if not free-of-cost. Our special emphasis should be on motivating the girls living in rural areas. This necessitates special campaign exclusively to promote women education. The task, of course, is difficult but not so difficult if we have a strong sense of determination and dedication. Women literates living in the rural areas should accept the responsibility of motivating the illiterate women


In addition to advertisements, the publicity measures are also required to be strengthened. This requires developing a rapport with the media' people. The governmental organisations or private organisations or agencies should pave ways for the same. They should organise seminars, conferences and workshops and should invite media people for an exposure. In most of the cases, publicity becomes more effective if the correspondents, press reporters etc. are motivated. All possible efforts should be made to convince them that the child education programmes are being conducted efficiently or the constraints in the development process are identified carefully. They can advocate strongly for the right cause to bring things on the rail.

Price Mix

Since we find involvement of private schools in the process, it is judicious that we also talk about the fee-structure. In the government schools, we find free-of-cost services but so far as the private schools are concerned, they charge exorbitant fees. Of course, they require to mobilise the financial resources but there must be a rational policy for the same. We should check commercialisation of education which is found exploiting the masses. We are not opposed to the charging of fees by the private schools meant for the children but they should not make it a source of making profits. According to the available seats, they should have a policy of charging fees on the basis of incomes of parents. In addition, they also bear a social responsibility of offering free-of-cost services to the poor and weaker sections of the society. Whatever the losses they generate due to cost-free services to the weaker sections would be charged from the high earning and middle-earning groups in proportion to their incomes. This is a rational pricing structure13 which would maintain the quality of education in the private schools. While fixing fee, the computation of costs on education should be done honestly. The process of computation should not pave avenues for profiteering. Besides, the private schools should also make a provision for the creation of a development fund and a portion of surplus should be appropriated to this fund annually for quantitative or qualitative improvements found essential in the face of latest developments. The main thing is quality of services and either private or government schools should be very particular to "Quality". We cannot deny the fact that the ultimate motto is to strengthen the foundation which should be given an overriding priority. Of course, the government schools, except a very few, are found in a depleted condition due mainly to the financial crunch. The exchequer is not in a position to finance schools and the existing pricing policy does not allow them to generate adequate finance from the internal sources. It is against this background that they fail in managing expensive inputs for offering quality outputs. We do not find anything wrong in charging nominal fee from students who are well-off. If they pay at least Rs. 20/- as fee (per month) to the government schools, the avenues would be paved for quantitative or qualitative improvements even in the government primary schools. The motive is to improve the standard of education which would, of course, be futile failing the availability of adequate finance.

Marketing mix for Secondary Education

After the completion of elementary education, we find the stage set for imparting secondary education which is considered to be an important ladder of education, specially with the viewpoint of making them understandable in the right perspective. We need to vibrate the positive trends in the enrolment and retention ratios. Since both the public and private schools are found engaged in the process, a sense of competition and coordination becomes inevitable. If we use seven years of imparting elementary education honestly and efficiently, the task further is not so difficult. The most important thing that we find at this stage is adopting a plan of education for teens with the least possible threshold barrier. The marketing of secondary education thus is found "more critical and challenging. We need more professionalism in our decisions. The motive is to engineer a strong foundation for the higher education which helps us in developing knowledge in a right fashion.

Product Mix

Curriculum/syllabi bear the efficacy of making available to us a right or wrong direction. If we are very particular to the designing of an ideal syllabi, the direction is found right which paves ways for the development of social and cultural values in which ethical dimension gets an


important place. We succeed in having a work culture, we succeed in maintaining organisational culture which help us in accelerating productivity and projecting a positive image. It is against this background that we assign due weightage to the development of services in tune with the changing requirements.

While innovating the marketing practices, it is important that we have quality outputs and this is possible when we have quality inputs. Till now we have undoubtedly been successful in developing knowledge but have miserably failed in producing an ideal citizen. This is found jeopardising our all efforts since creasing drop-out ratio, it is judicious that we think in favour of motivating the parents. This is related to personal promotion since it is instrumentality of a personal promoter that determines the magnitude of success. We can not negate that in the rural areas we need a special task force to motivate the parents. If we fail in the motivation process, we have no option but to punish those parents found responsible for discouraging their children. In this context, we need to assign due weightage to the behavioural dimension since it would help teachers in sensitising the motivation process.

The second task is related to non-personal promotion where we focus on advertisement and publicity measures. In the modern world, we have sophisticated technologies and sensitive media to make our slogans more effective. To be more specific, TV/audio-visual exposure need here a special mention. The government and private agencies evincing interests in this mission should come forward and contribute a lot to the advertising process. The professionals can play here an important role by making the slogans, messages, appeals proactive. Since it is a mission, they should work with the motto of subserving the social interests or should charge the minimum possible for the services they make available. The visualisation process needs due weightage, specially while designing the advert tisement layout. Like AIR and DDI, other private TV channels should also evince interests in advertising slogans related to child education. They should charge nominal, if not free-of-cost. Our special emphasis should be on motivating the girls living in rural areas. This necessitates special campaign exclusively to promote women education. The task, of course, is difficult but not so difficult if we have a strong sense of determination and dedication. Women literates living in the rural areas should accept the responsibility of motivating the illiterate women.

In addition to advertisement, the publicity measures are also required to be strengthened. This requires developing a rapport with the media people. The governmental organisations or private organisations or agencies should pave ways for the same. They should organise seminars, conferences and workshops and should invite media people for an exposure. In most of the cases, publicity becomes more effective if the correspondents, press reporters etc. are motivated. All possible efforts should be made to convince them that the child education programmes are being conducted efficiently or the constraints in the development process are identified carefully. They can advocate strongly for the right cause to bring things on the rail.

Price MixSince we find involvement of private schools in the process, it is judicious that we also talk about the fee-structure. In the government schools, we find free-of-cost services but so far as the private schools are concerned, they charge exorbitant fees. Of course, they require to mobilise the financial resources but there must be a rational policy for the same. We should check commercialisation of education which is found exploiting the masses.

In the curriculum, we find both formal and informal education. While imparting formal education, our emphasis is on language, a few selected subjects, general science, sports and music and art. At the intermediate stage, we think about faculty programming. In the context of informal education, we find aesthetic sense, environment, vocational course, health care and population, culture and ethics and national excellence. It is already pointed out earlier that we have a tough task of educating the teenagers who are found moving in the wrong direction. The government or private schools have to follow the syllabi approved by the national and provincial boards.

The certification boards have to see that their stamps have some values. The selection of different subjects should be in the face of global developments so that our products bear the efficacy of accepting the best and rejecting the worst. They would develop a strong elimination potential, if this stage of imparting education is managed properly. The knowledge of language is found essential to develop their reading, writing and perceiving skill. The knowledge of general


science is found essential to make them aware of the latest developments around the world. The knowledge of a few selected subjects is essential to select a discipline for specialisation. We find sports, music and art in the formal education since we recognise the outstanding contributions of these traits in having a team spirit.

We focus on aesthetic sense since it plays a vital role in preserving values, generating efficiency and making an assault on monotony. Knowledge of environment to counter the problem of environment pollution; knowledge of health care and population to make our demographic structure optimal and sound; knowledge of social services to involve them in the social transformation process so that they oppose the destructive forces and conditions; knowledge of culture and ethics to sound their capacity of making a positive/creative decision and national excellence to think, plan and act in the best national interests. Thus we need to think in favour of a fair synchronisation of formal and informal education.

Promotion Mix

If we make qualitative-cum-quantitative improvements in the system of education, it is essential that our target prospects get right information on right time. Promotional measures simplify the task vis-à-vis make our efforts productive. At the outset, we turn our eyes on the instrumentality of personal promotion in which the teaching and non-teaching personnel are supposed to play a decisive role. We have not only to increase the enrolment position but have also to increase the retention ratio. The prospects, specially living in the rural areas are found less receptive. Very surprisingly, the parents are found here playing a negative role. To be more specific the rural women prefer to discontinue their education. It is a stage from where the retention ratio is found moving downward. A number of rural parents appear disinterested in educating their daughters in high schools. It is against this background, that the personal promoters have to make sincere efforts to motivate the prospects. If they succeed in generating thirst for education, the derailed system may come on the rail. We accept the fact that persuasion requires motivation and particularly in the present materialistic age we need to assign due weightage to the financial incentives. Private schools do not face this problem since the teaching and non-teaching staff apprehend a threat to their job, if the number of students goes down. In the government high schools, the teachers and other staff feel that they are getting salaries even if the enrolment, retention and results are not satisfactory then why they should take trouble. It is in the wake of this that we need to link the incentives to the performance which includes three elements, e.g., enrolment, retention and examination results. To be more specific we need special campaigns in the rural areas, preferably to motivate rural girls and their parents.

So far as the non-personal promotional measures are concerned, we need innovative efforts since we have sophisticated communication technologies. Of late, we find more than 90 per cent villages linked to national TV network and radio that make our task easier. The professionals while designing advertisement layouts or composing slogans, messages and appeals need more excellence and personal touch. The private high schools are now found advertising efficiently but so far as the government high schools are concerned, they do not find it essential. Against this background, we find it pertinent that advertisement campaigns are strengthened, innovated, conceptualised and visualised in a right fashion. Of late, we have sophisticated printing media and we can also use the same for this purpose. The media in general are required to be liberal to the advertisement campaigns related to education. Not only the DDI and AIR but even the private TV channels need to extend their best possible cooperation. The administration and teaching and non-teaching personnel should attempt to develop rapport with media, specially to publicise. This would also minimise the promotional budget of government and private high schools.

Price MixAn important decision making area related to marketing is the fee structure which appears to be a challenging task, specially in the Indian setting where a majority of prospects are not in a position to afford the expensive educational services. Since both the government and private high schools are engaged in the process, the need of the hour is to follow such a strategy which allows even poorer and weaker sections of the society to avail the services. Of course, the innovations in the process of education have been found increasing the input costs vis-a-vis the fee structure. Here, a rational pricing policy would make the ways for social orientation. It is against this background that we need more care while setting the fee structure. So far as the government high schools are concerned, they are neither charging fees nor making available to the prospects the


standard services. The exchequer finds it difficult to finance the development plans and ultimately the worst sufferers are the students. This makes it clear that only a basic change in the pricing strategy would pave ways for the time honoured development of government schools. If we find it essential to protect the dying government schools, the prospects have no option but to bear the burden. A rational pricing policy focuses on charging more from the affluents and the least possible from the poorer and weaker sections. Even we may think in favour of offering free-of-cost services to the students who deserve so. This income-based strategy would generate surplus to the schools and would make possible necessary developments to innovate the system. On the other hand, the private schools have been found charging exorbitant fees. It is necessary to mention that educational institutions are not supposed to make profits since we call them not-for-profit making organisations. However, it is essential that they charge fees to maintain and develop the institutions. It is not possible that all the institutions offer the same quality of services. This makes it clear that educational facilities and quality of personnel would determine the fee structure. We can have different grades and the fee-structure would be fixed accordingly. It is very natural that fee-structure of both the government and private high schools cannot be uniform still the structure is to be made rational. Charging more from the high and medium income groups in proportion to their incomes and charging less from the low and marginal income groups again in proportion to their incomes would be a rational policy.

Place Mix

The problem of offering the services is found much more complicated, specially in the government high schools where a big gap is found between the formulation and implementation of a particular plan. The bureaucracy and the teaching and non-teaching personnel form a long chain. This makes it essential that government high schools are given more autonomy. The teaching and non-teaching staff are supposed to make sincere efforts to show personal-touch-in service. This draws our attention on imparting special training to them so that they understand the behaviour and expectations of students and attempt to satisfy them. To be more specific the students having a rural background have yet not crossed the threshold barrier. This questions their receiving capacity vis-a-vis the retention ratio. If they remain dissatisfied for the long time or if teachers are not communicating to them effectively, they stop coming to the schools. This problem is found at peak, specially in the rural areas. The teachers are not accountable for the increasing drop-out ratio. The crux of the problem is that a majority of the weaker sections come under this purview which jeopardise all our efforts for making them educationally sound. If we are really interested in initiating qualitative-cum-quantitative transformation in the system of education, we have no option but to seek the best possible cooperation of teachers. So far as the private high schools are concerned, the magnitude of the problem is not so grave since the teachers if they fail in motivating the students are forced to make a good-bye to the school. In addition, we also find the minimum possible gap between the formulation of policy and its implementation in the desired way. So far as the financial incentives to teachers are concerned, the government high schools are found establishing an edge over most of the private high schools but so far as the offering of services are concerned we find a reverse trend. The motive is to involve teachers in the time honoured implementation of teaching plans, and in the Indian condition, we find it difficult unless the teachers are found honest and efficient. It is against this background that we need to assign due weightage to value-engineering process right from the elementary stage, mainly to inject ethical values to receive the best and to deliver the same.

Strategic marketing for Secondary Education

We have gone through different dimensions of marketing secondary education. It is an important stage from where we start talking about the development

relatives and so on. It is not meant that they should not think in favour of advertisement and publicity but here our emphasis is on an optimal investment. We should have a budget for promotion but an overriding priority is to be given to the services that we make available to our students.

In the Indian setting, we need priority attention to the rural students and the rural high schools. It is on account of the fact that the condition in the rural areas is found very alarming. The conscious students and rich parents prefer urban high schools which promote migration of rural population to the urban areas. If we plan to develop a school in the villages close to the towns


and cities, the "reverse exodus" cannot be denied which would only not encourage rural students and parents but would also engineer a foundation for the development of backward villages. In the beginning, it is very natural that the private sector would not follow it and therefore, the government high schools equipped with world class amenities and facilities should preferably be opened in the villages not in towns and cities.

Marketing mix for Intermediate Education

After the completion of secondary education, we bear the responsibility of strengthening the foundation for higher education and this is made possible by enriching the intermediate education. Again we need to manage the teenagers, which complicates our task and requires more professional excellence. The selection of a particular discipline is made at this stage and therefore it is an important decision making area for career planning. The aptitude test is to solve the problem efficiently in selecting a particular area for developing knowledge. Like the secondary education, we find here the involvement of both the government and private plus-two schools. In addition, we find this stage also suitable with the view point of vocational education since the prospects are now found at the threshold of maturity. Since the standard or quality of services is substantially influenced by the soundness of an organisation, it is important that educational institutions serve the society in the face of holistic marketing principles which allow them to develop, to enrich their potentials but not to make profits. It is against this background that we talk about the application of marketing principles in the educational institutions.

At the very outset, let us turn our eyes on the development of curriculum for intermediate education. At almost all the stages of education, the development of curriculum is found in the face of changing socio-economic and cultural requirements and this stage cannot be an exception to this well established theory. While designing syllabi, we need to assign due weightage to the prospects and their background, specially to brush-up their potentials in tune with their counterparts living in the urban areas and coming from the highly educated families. As and when we find threshold barrier, the best solution is to start a crash

programme/capsule course to remove it on a priority basis since it proves to be an important barrier to effective communication and further develops inferiority complex. Though the educational institutions assigning an overriding priority to this dimension from the very beginning do not face such problem but in the Indian setting a number of institutions keep it at the bottom of their agenda which complicates their task and the students ultimately prove to be less receptive.

We assign here due weightage to the vocational course since it is found helpful in many ways. To be more specific the poor students who are not in a position to afford expensive education can get financial support by using their skills. Our focus should be here on linking the vocational courses with the latest developments so that we do not face any difficulties in developing expertise in the area, if students like or the circumstances necessitate.

The promotional decisions also play here a significant role to motivate the prospects. The instrumentality of personal promotion determines the magnitude of success. The students are here more conscious and therefore the teachers are supposed to increase their communication ability. Of late, a number of technologies are available to focus attention on emerging sensitive problems and the teachers are expected to use the same to minimise the duration of credit hours for their core curriculum so they get enough time to go through the allied problems related to informal education. At this stage, the drug-addiction is found emerging-as a big social evil and teachers, as a part of informal education, can highlight on its negative effects. In addition, advertisements are also used here to motivate students, particularly to seek admission. The private schools are found advertising through print media but again we do not find government schools showing interest in advertising. If the media support them, they can make it possible even without raising their budgets. We do not find anything wrong in advertising since through advertisements we provide an opportunity to our students to judge the best and to take a decision in tune with their requirements and potentials. The government as well as the private schools should attempt to develop rapport with the media so that they publicise efficiently even without influencing their budgets.Again we find fee-structure a critical decision making area for private or public schools. Since the institutions are now required to invest more on inputs, it is judicious that they charge more


for their outputs. Like secondary schools, the plus-two schools are also supposed to adopt a rational fee-structure which provides an opportunity even to the poorer and weaker sections of the society to take admission and to get education. The motive is to subserve the social interests and we find holistic pricing policy suitable for educational institutions since it only not paves avenues for the development of schools but also provides an opportunity to the poor and intelligent students to get education.

Marketing Mix for Higher Education

Education for the development of excellence; education for the development of expertise; education for the development of knowledge are some of the motives which necessitate a sound strategy for the development of higher education in almost all countries of the world. Establishing leadership in the world is possible when we have a well developed system for higher education in which efficiency remains the only criterion to evaluate the performance. The universities, colleges, institutes, studies and research centres are found engaged in the process of offering higher education. Scientific inventions and innovations, technological advances, professional excellence, managerial proficiency are some of the important dimensions playing a decisive role in shaping the destiny of a nation. The system of higher education is found efficacious in making available to the society a dedicated, committed, devoted and professionally — sound team of human re sources who decide the future of a nation. Against this background, the crying need of the hour is to manage the system of higher education in such a way that sets a right direction for the development of human resources in the national and international perspectives. Quality outputs in a very natural way need quality inputs which generally are found expensive. We attempt to focus here on the problem of rising costs of inputs for producing the quality outputs. In the Indian setting, the problem is found a challenging one since the masses are not in a position to afford the high costs for getting the quality services. The universities., colleges, institutes, research centres are found in a depleted condition. The financial crunch is a major problem which has been disallowing these centres :.a incorporate the time honoured changes in their curriculum even if they are founi dying. Except a very few almost all the centres are engaged in producing sum standard outputs resulting into unemployment, poverty and backwardness. It is in this context that we talk in favour of marketing higher education which according to the holistic marketing principles attempt to enrich the efficacy of these centres vis-a-vis offer quality services even to the poor persons having an outstanding educational background. This is based on the principles of societ.a. marketing in which the educational institutions are not supposed to make profits. Thus, the marketing practices here pave ways for the development of human resources in the face of international specifications. Here, the qualitative transformation establishes an edge over the quantitative transfiguration.

Product Mix

In the process of marketing, at the very outset, we turn our eyes on the multi-dimensional services to be made available by these advanced centres learning. We call it a service mix. This in a very natural way gravitates our attention on the curriculum which only not produce efficient persons but even the dedicated and committed persons. At the different stages of education, we have talked about ethical, moral, social and cultural values. If we have developed human resources in the face of curriculum discussed earlier, it is very natural that a sound foundation is already engineered for the subsequent developments. Important dimensions of the service mix are buildings, furniture, sanitation, water, electricity, library, equipments, laboratory and the teaching and non-teaching personnel. In the face of technological advances, the universities, colleges and institutes need to equip the information centre for data processing. These items increase the costs on inputs though for innovations in education we find them very much instrumental which have a far reaching effect on the communication ability of teachers. In addition, it is also found effective in increasing the receiving capacity of students. To be more specific the institutions now need to have a well-established computer lab. For the development of premises, the plantation and gardening are also found important. The car-parking, cycle-parking, auto-parking arrangements, of late, are found necessary in almost all the educational institutions. In the group of sophisticated communication technologies, we now find fax machines and inter-net services essential to transmit and receive important messages. The computers are required to be connected with internet. These recent developments are now making the educational services more expensive. If we have to make available to our students,


the world class teaching aid, we cannot underestimate the latest developments. On the other hand, the prospects are not in a position to bear the high fee-structure. The educational institutions find it difficult to improve their core and peripheral services due mainly to financial crunch. The government colleges and institutes fail in mobilising finance from the internal sources. It is in this context that we talk about improving the quality of services even if the prospects have to bear some burden.

Promotion MixThe universities, colleges and institutes across the country have been found making huge financial provision for promoting their services. In the Indian setting, the private colleges and institutes have also been following the same strategy but so far as the government managed colleges and institutes are concerned they are not in a position to follow the same due to financial constraints. Since we are discussing this problem with the notion that educational institutions have to make possible qualitative and quantitative improvements in the system, we do not find any thing wrong in promoting the same. Here, the teaching and non-teaching personnel can play a significant role. The personal promotion is related the instrumentality of teaching and non-teaching personnel who play a decisive role in motivating and influencing the prospects. The enrolment position is be improved in the face of accommodation or the availability of seats. In adding to the personal promotion, we also need to advertise our services. The pri-e institutions have been found advertising but the government institutions in doing so. While advertising, it is important that we focus on the quality of services and visualise the outstanding contributions of the institutions to the development of higher education. The audio-visual exposure has considerably been successful in sensitising the prospects. We can also take the support of printing media. The TV and radio should have a policy to promote the educational institutions, specially to motivate the rural prospects and categorically to influence the girls living in the rural areas. They are supposed to charge very nominal amount for this purpose and to advertise the messages and slogans during sensitive hours keeping in view the rural prospects. If we talk about a rational policy for fee, it is judicious that we also talk about bearing of social burdens by media. The publicity measures are also required to be strengthened and for this we need to develop rapport with the media people. To be more specific for the government managed colleges and institutes, we find it essential since they are found charging very nominal fees from the students. The motive in promoting the services is to inform, sense and motivate the prospects so that we succeed in getting the best intakes to impart the world class education.

Price MixIn a country like India where we find a majority of the persons poor and marginally poor, it is a challenging task to adopt a fee structure which is welcome by almost all the segments.15 However we find it essential to go through the problem and to adopt a strategy which is acceptable to the majority of our prospects. It is not essential that higher education facilities are made available to all. It is against this background that we have talked about vocational education. The students coming in the "average" category or even in "good" category should prefer specialisation in the vocational courses. On the other hand, the students under the "excellent" and "very excellent" categories should prefer higher education. We do not talk here about regional or rural bias. The facts are based on their credentials or say, outstanding merits. The colleges, universities and institutes should adopt a rational fee strategy which charges the least possible fees from the poor students. We can also think here regarding free-of-cost education to the students found extraordinarily meritorious but abnormally poor. On the other hand, the losses on account of this provision should be shared by medium and high income groups in proportion to their incomes. We can also think in favour of providing tax exemption facilities to the medium group parents paying high fees. The donations received from different sources should be meant for the development and expansion plans. Such a rational fee strategy would make the educational institutions competent enough to initiate qualitative and quantitative transformation in the higher education. The students would be benefited and the educational institutions would contribute substantially to the formation of human capital. It is not wrong to mention that now parents are found more conscious to the education of their children and they make huge provision for the same in their family budgets. This is simply to focus that now prospects are very conscious to get quality education even if they have to pay more. In a country like India, it is essential that government colleges with all the latest facilities are located in villages so that the problem of urban congestion is minimised considerably.In any case, the private or government colleges and institutes should not create such a situation which stands as a major barrier in promoting education to women. Contrary to it, they should formulate such a strategy which motivates and persuades them to come out to develop their


credentials so that their contributions to the development of education and knowledge are increased substantially. We can use fee as a motivational tool for this purpose. In addition, we should also offer to them other incentives. It is against this background that such a strategy would pave ways for the development of the personalities of children. Since tomorrow when they become a father, mother they can educate and train their children.

Place MixOur emphasis is here on the gap that we find in between the formulation of an education plan and its implementation in the institutions concerned. In most of the cases, to be more specific in the government colleges and institutes, we find :t acting as a major barrier. The policy makers frame policies and the bureaucrats in government and line-staff in universities, colleges, institutes waste much — ore time in their implementation. The development and expansion plans, the scholarships to students, even salaries to teaching and non-teaching personnel ire delayed on that account. At this stage when we advocate in favour of offering re financial and non-financial incentives to the students and teachers, such a situation is to jeopardise our all efforts. Once again, it is essential to focus on the them that if the IITs and IIMs are making available to the society the best lot human capital, it is not due to buildings, furniture, and other material assets have but due to efficient, qualified and dedicated teachers they employ, motive here is to make it clear that even with the least possible infrastructure, we can be successful in producing the best, if we have a team of efficient dedicated teachers.

Strategic Marketing for Higher Education

In the Indian environment, a good number of educational institutions engaged in offering higher education are found in red. We cannot expect excellence in education unless concerted efforts are taken to bring things on the rail. A mushroom growth of substandard institutions cannot serve our purpose. To be more specific when the intensity of competition is found at its peak, it is pertinent that we set a target and fix the budget. We cannot deny the fact that a complete departure from ethical and moral values has considerably been responsible for the-present degeneration in almost all the areas. Of late, we find lack of work culture, organisational culture and value-based policy decisions. If we go to the roots of the problem, it is almost clear that an important reason for the present degeneration in the system is lack of value-engineering education. If we educate, train and develop human resources without inculcating values and culture in their credentials, it is very natural that almost all the sectors sooner or later suffer sizeably. The policy makers, decision makers, technocrats, bureaucrats, politicians, teachers etc. are the products of social institutions. And if the social institutions start degenerating, the systems start collapsing. Against this background, we talk about strategic marketing for higher education. We have a task to educate, train and develop human resources who are not only technically and professionally sound but at the same time are also morally and culturally profound to serve an organisation in a right fashion. We go through the problems in the Indian perspective where a number of persons though very excellent fail in getting higher education since they are very poor.

Once again we accept the fact that higher education should not be generalised. The services are meant for those who have excellent and very excellent educational background. At the outset, we turn our eyes on the curriculum and the necessary changes that we feel essential. While developing curriculum. we need excellence in education both according to the national and international specifications. Time tested norms, modernisation of infrastructural facilities, tearr. of faculty, responsiveness to social interests, due weightage to social values, customs etc. are some of the key dimensions on which we need an intensive care, have professional excellence but we lack national excellence. We have awareness but only for personal gains. We have intelligence but only for manipulation Can we deny it?

Of course, we find it essential to incorporate necessary changes in our syllabi in tune with the latest developments across the country but at the same tree have also to be careful that values are not on the bottom of our agenda. A fair synchronisation of professional and national excellence thus would serve purpose. The secrets of Japanese developments are coiled in the essence of then dedicated and committed team of human resources who never disappoint there organisations.. We talk about free of cost services to the poorest of the poor but after getting education, they


have been found migrating to other countries for capitalising on the opportunities just for materialistic personal gains.

Thus the need of the hour is to develop human resources and to be sure that their services are available to the nation on a priority basis.

We talk about promotion with the motto of informing, sensing and persuading the prospects. Since we are initiating qualitative improvements and therefore we do not find anything wrong in advertising and publicising. Here, it is also important that we are not making education a business. The educational institutions should have a budget for promotion and the limits should not be crossed. We cannot deny that word-of-mouth communication or recommendation is considered to be the most sensitive device to promote the educational institutions. The advertisement messages, slogans and appeals may be insensitive but the recommendations of our friends, relatives are of course to be proactive. In the marketing world, we also call them hidden sales-force and the teachers in the world of education are found playing this role of producing hidden sales force. If in the universities, colleges and institutions, we find very excellent teachers, the prospects in general would prefer to seek admission there. Since we have to make sincere efforts to have a team of dedicated and devoted teachers, these things need an intensive care.

In the context of setting fees, we need more care. It is very natural that increasing costs on inputs advocate in favour of a high fee-structure but we need to explore avenues for adopting a fee-structure that allows even poor students to taste the flavour and fragrance of expensive and world class educational institutions. Earlier we have talked about a rational fee-structure which would, of course, be helpful to the educational institutions. The motive is to open doors for excellent and very excellent poor students. If we are really interested in promoting women education, we should think in favour of a special fee-structure for them.

Regarding distribution of services, the government managed educational institutions need a basic change in their policy decisions. The policy makers bear the responsibility and let's hope that they make possible revamping of the whole structure in the face of recent developments across the country. They are also supposed to provide more autonomy to the educational institutions so that a big gap in between the plan formulation and plan implementation is minimised considerably.


HOSPITAL MARKETING

Hospital: Conceptual Framework

India’s hospital or healthcare sector has made impressive strides in recent years. It has transformed to a US$ 17 billion industry and is surging ahead with an annual growth rate of 13% a year. The healthcare industry in India expected to grow in size to Rs 270,000 core by 2012. The healthcare industry employs over four million people, which makes it one of the largest service sectors in the economy of our country.

Healthcare is dependent on the people served; India’s huge population of a billion people represents a big opportunity. People are spending more on healthcare.

Major inputs of health care industryThe major inputs of health care industries are as listed below:I. HospitalsII Medical insuranceIII. Medical softwareIV. Health equipment

PEST ANALYSIS

Political factorsMost of the healthy nations are also wealthy nations. In India even after 53 years of independence we all have to accept that government has failed to provide basic healthcare. Healthcare is the neglected field, only meant for slogans by our politicians. To improve healthcare facilities we have to provide special assistance to private healthcare sector. The reality in private healthcare sector is that as an industry it has long gestation period and so most of the bigger projects fail.

Government has to give certain concessions to private health sector. It can be in the form of free land for small hospitals at district levels or concession in power tariff. Government later on gets back revenue in the form of tax when these institutions start making profits. Concessions can be limited to first five years or so. Maharashtra government is playing an important role in the development of the hospital sector.

Economic factorsThe Indian healthcare is the next boom in the country after the IT euphoria. Setting up hospitals is not an easy task. The amount of hospitals in India is very less when compared to the other developed countries. Even the urban areas do not have enough medical facilities. In the rural areas one village has only one doctor, who may not be very well qualified.

The other governments of other states should take up a cue from the Maharashtra government, in setting up similar Joint ventures all over the state with the assistance of World Bank. The World Bank can make available funds of around Rs 700 crore for state health systems and development projects.

The people in India do not avail of the hospital facilities very soon. This is because of the high cost related to it. However this may all change because of the increasing deployment of third party payment either in the form of Medical and Allied Insurance, or in the form of reimbursements from the State. This in turn will increase the employment opportunities to many people.

Social Factors1. Certain percentages of beds have to be kept for poor people. E.g. in Mumbai 20% of beds

has to be kept reserved for poor people.2. Look after the needs of local poor people.3. Open counseling and relief centers.4. Teach hygiene, sanitation among the poor masses.


5. Safe disposal of hospitals wastes like used injection needles, waste blood etc. and taking due care of environment.

6. Spreading awareness about various diseases through campaigns and free medical check ups.

7. In brief the social aspect of hospitals industry is to see that latest treatment and medicines are available to people at large at concessional rates or free of cost and that its activities are not only restricted to rich people.

Technological Factors

We are witnessing Information technologies transforming the way health care shall be delivered. Innovations such as computer based hospital information systems, medical records; decision support systems, health information networks, telemedicine, real time image transfers and newer ways of distributing health information to consumers are beginning to affect the cost, quality, and accessibility of health care. The technologies today can support vast databases, network communications, quick distribution and reliable image transfers.

I’s of hospital industry

IntangibilityIntangibility indicates that the service has no physical attributes and as a result, impossible for customer to taste, hears, feel or smell before they actually use it. Hospital industry is where the customers (patients) get treated for physical problems they have. The customers can’t really realize the service provided until they get well. For this they have to provide good supplementary services.The only way they can provide tangible clues to make the service provided a success. For e.g. the hospitals provide extra facilities like television, or then friendly personnel’s can make a difference.

InconsistencyIt’s also referred to as heterogeneity or variability. The inconsistency occurs largely because of

Different service providers perform differently on different occasions. Interaction between customer and provider may vary from customer to customer.

Standardization is hard to maintain. Every doctor is not the same and may not give the same diagnosis. Also a patient may not each diagnosis in a different way. Also since the quality of work done can be determined only after the service is performed the providers have to be well trained in case of performing the service process. InseparabilityInseparability means that the service cannot be separated from the creator-seller of the service. In fact there are many services that are created delivered and consumed simultaneously through interaction between customer and service producers.Here too the customer, i.e. the patient has to come up to the hospital to get the treatment. The customer has to be present when the service is performed. In fact in case of hospitals the service is created and delivered simultaneously. The type of service to be provided depends on the customer.

InventoryServices can not be easily saved, stored or inventoried. This is all due to the perishable nature of the services. Also there’s cost also associated with the carrying of inventory. Here the costs are more subjective and are related to capacity utilisation for e.g. if a doctor is available but there’s no patient during that period, the fixed cost of the idle physicians salary is a high inventory carrying cost.Also due to demand fluctuations the services cannot be stored. E.g. there’s a lot of rush at the dentists clinic in December and January as that’s the time when there are lots of tourist visiting India.

Types of hospitals

The classification of Hospitals on the basis of objective, ownership, path and size.


1. On the basis of the OBJECTIVE there are three types:Teaching cum research for developing medicines and promoting research to improve the quality of medical aid.General hospital for treating general ailments.Special hospitals for specialized services in one or few selected areas.

2. On the basis of the OWNERSHIP, there are four types:Government hospital, which is owned, managed and controlled by governmentSemi-government hospital, which is partially shared by the government.Voluntary organisations also run hospitals.Charitable trusts also runs hospitals.

3. On the basis of PATH OF TREATMENT, there are:Allopath which is the system promoted under the English system.Ayurved, which is based on the Indian system where herbals are used for preparing medicines.UnaniHomeopathOthers

4. On the basis of the SIZE, there are:Teaching hospitals – generally have 500 beds, which can be adjusted in tune with

number of students.District hospital – generally have 200 beds, which can be raised to 300 in

contingencies.Taluka hospital – generally have 50 beds that can be raised to 100 depending on the

requirement.Primary health centres – generally have 6 beds, which can be raised to 10.

Emerging Trends in Medicare

Of course, a number of spectacular successes have been achieved in India, respect of medicare services. Small-pox stands eradicated and plague is no longer a problem. Morbidity and mortality on account of malaria, cholera and VE other diseases have also declined considerably. Despite a number of constraints we have also been successful in devising sophisticated world class medical The Crude Birth Rate and Infant Mortality Rate have also been found showing downward trend. At the same time, it is important to mention that we still hi the largest number of leprosy patients in the world. Cholera is still around often appears as an epidemic. There is a lot of talk about AIDS but tuberculosis is greater killer than AIDS. We talk very loudly about expanding hospitals rural health centres but we have one doctor for 2,165 people whereas in Italy we have one for 195. Malaria which had been eradicated or dramatically reduced in countries in the 1960s has now returned to India and the available medicines found ineffective. Black fever is found spreading like epidemic. Dengue has 1 found aggravating the magnitude of the problem.

If we turn our eyes on hospitals and healthcare centres supposed to available to the society quality medical aid, it is amazing that government hospitals are found dying and the rural health centres have virtually become existent. Buildings are there, equipments are there, patients are there but doctors, of course, on record they are also there but actually they are busy in' private clinics. The patients do not get medical aid since even minor surgical items are not in the stores.

When hospitals in towns and cities are in a depleted condition, one can easily imagine the potentials of rural centres. Of course, the urban population could get the benefit of pulse polio activated under aggressive marketing strategy but a very few of the rural population could avail the benefit. Malaria, cholera are spreading like wild fire but the policy makers are found satisfied with the fake data.In view of the above, it is right to observe that even after the completion of I Eight Five Year Plans (1951-1997), we have not been successful in making available to the society even basic medical aid then what to talk of quality medicare services.


The non-existent or depleted government hospitals have engineered a strong foundation for the development of private hospitals. The expensive inputs for world class medicare services are used in some of the selected hospitals but the poorer sections find it difficult to avail. To be more specific in the decades 1980s and 1990s, we have witnessed frequent innovations and inventions in the medical sciences but the sophisticated developments remained confined to the cities precincts only.

We cannot deny that some of us are now more conscious to physical fitness and therefore also conscious to the living conditions, nutritional awareness naturally. But the most vulnerable and less receptive rural segment is yet to be motivated. The policy makers could hardly evince interest in promoting hospitals in the outskirts or villages which raised the pressure on big cities and the environmental problems aggravated. We could neither prevent diseases nor could make suitable arrangements for medicare. It is right to say that a number of diseases are prone to water, sanitation and food. The educational institutions, the municipalities, the local bodies, the corporations, the government and private hospitals and even the voluntary social organisations failed in inculcating mass awareness. What to talk of rural population even urban population and surprisingly some of the so-called ultra modern urban elites have played a big role in making rhe environment disease-prone.

The aforesaid facts are a mute testimony to this proposition that during the yesterdecades, we have failed in improving the medicare facilities keeping pace with the growing requirements but have been successful in making the environment unhealthy which is found raising the pressure on both the government as well as the private hospitals. It is against this background that we find an apparent increase in the cases of ailments. As all the four metropolises are reeling under heavy pollution, we find the environment prone to some of the special diseases. Even small cities with big industrial complexes like Bhopal, Kanpur are found heavily polluted and turning into gas chambers.

In view of the prevailing conditions, we expect much more from hospitals government or private. They are supposed to play an outstanding role. We cannot serve others unless we are strong enough to face rough and tough weather. This necessitates managerial proficiency. By marketing medicare services, hospitals would only not serve masses but would also be efficacious in inculcating mass awareness to prevent ailments and to decrease the number of prospects. Contrary to other organisations, the success rate of a hospital is coiled ir. the essence of creating mass awareness and playing an incremental role in preventing ailments and minimising the number of prospects.

Marketing Medicare

At the outset, let us go through the conceptual aspect of marketing medicare. By marketing medicare services we mean making available the medicare services to the users in such a way that they get quality services at the reasonable fee structure. The social marketing principles focus on making available the services even to those segments of the society who are not in a position to pay for the services. It is in this context that we find marketing medicare a managerial approach to formulate a sound service mix in the face of latest developments ir. the medical sciences. The societal marketing also focuses on promoting the services in the face of target users. The principles throw light on inculcating mass awareness so that the prospects change their living conditions, lifestyles, preferences, food habits, found prone to diseases. Thus contrary to other organisations the hospitals responsible for making available to the users the quality medical aid are supposed to minimise the number of prospects. We cannot deny that most of the diseases are prone to our living conditions. If we improve the environmental conditions, the avenues for diseases are sizeably contracted and in due course we find a decrease in the number of prospects. Thus marketing medicare is well supported by innovations in promotion. Since we consider hospitals or healthcare centres to serve as social institutions, it is not just that they make profits. Against this background, we call them not-for-profit making organisations. Quality inputs can only deliver quality outputs. If hospitals invest on quality inputs, the costs on services go up. According to the general marketing principles, we have a freedom to generate profits and therefore the price setting process is not so difficult. The societal marketing principles are found a bit different to the genera-marketing principles. Since we talk about essential


services and are also aware of the fact that a majority of our prospects are poor, the price/fee setting process is found a challenging task. Against this background, we advocate in favour of a rational fee structure which would be adjusted in proportion to the incomes of the different categories of prospects. The marketing principles for medicare services also focus on distributing the services to the users in a decent way and essentially on time. This draws our attention on the distribution channels. There are a number of agencies for extending financial and technical support to hospitals. In addition, we find involvement of a number of core and paramedical personnel. A minor gap in the distribution process may result in grave consequences. The societal marketing principles suggest a small channel with the minimum possible gap between the provider of services (hospitals) and the users (patients).

In view of the above, it is right to opine that marketing medicare is a managerial device to satisfy the users so that they help in promoting the business and the hospitals are found successful in projecting a positive image.

Justification for marketing Medicare

Marketing in Hospitals is unethical was the frequent refrain in the eighties, when very few hospitals realized that it was necessary to incorporate marketing as an integral function in the hospital operations. But the major argument at that time lay in understanding whether this professional orientation was really required for its viability, profitability and sustainability. This argument however became favorable in the late nineties as corporate companies like Wockhardt and Max India started venturing into the hospital industry, apart from the ongoing mergers and acquisitions that were already taking place at that time. Hospitals started building tie-ups with corporate clients, as there was already an abysmal utilization of resources in the existing hospitals. In addition to the above a major factor that contributed to the acceptance of marketing in hospitals was an increase in the delivery of services.

Perception of patients was another important consideration for hospitals, as they felt that the patients would take them as profit oriented organization rather than service-oriented organization. Ultimately, marketing was accepted only by a few while others discarded the concept Hospitals who accepted marketing also carried out their function by concentrating around corporate clients. Lately it has been felt that many Indian hospitals have a dilemma regarding the functions of marketing. In an era where hospitals are experiencing a major shift in their clientele, they are worried more about the patients’ perception of hospitals and therefore the concept of brand restructuring and brand engineering is vital.

As hospitals spend millions of rupees in technology and infrastructure, it becomes necessary, that they attract patients and generate funds. In order, to do the same, the hospitals follow various marketing and brand building exercises. Some of them are listed below:

1. Many hospitals have eminent personalities from the industry in their Board of trustees. This indirectly leads to increase in, inflow of patients, working in the companies of these Trustees. Besides the presence of eminent personalities creates a sense of confidence in the minds of people.

2 Private hospitals can attract their shareholders by offering discounts. For example, a special discount of 20 percent on all preventive health checks is offered to all shareholders of Apollo Hospitals Limited.

3. Hospitals have a long-term understanding with PPO’s (Preferred Provider Organization), which further have understanding with corporates. Any case of sickness found in the employees of these corporates refer them to the PPO’s which further sends them to the hospital for check-ups and treatment.

4. The success rate of crucial operations and surgeries, reflect the technological and knowledge- based edge of the hospital over the’ competitors. Such successes are discussed in health magazines and newspapers, which become a natural advantage for the hospital.


5. Some hospitals by means of their past track record have created a niche market for themselves. For example, Hinduja is known for its high-quality healthcare at reasonable rates, whereas Lilavati Hospital is known for its five star services.

6. Hospitals hold seminars and conferences relating to specific diseases, where they invite the doctors from all round the country, for detailed discussion. This makes the hospital well known amongst the doctors, who could in future refer complicated cases to the hospital.

7. Hospitals can also promote medical colleges. This helps them to generate extra resources in form of fees using the same infrastructure.

Thrust Areas For Medicare Services

A hospital is a center for tertiary medical care, & India is home to some of the largest hospitals in Asia. The latest treatment options should always be available at these centers as a beacon to guide the entire medical community while providing top-notch medical care to patients. Often a country’s medical prowess is judged by the condition of its hospitals.

Here we will discuss in brief some of the latest developments in major hospitals in India. Aromatherapy at Apollo. Biventricular pacing. Bone bank at AIIMS. Hospital administration. Medical records management. Oxygen under pressure treatment at Apollo. Waste management. Telemedicine. Virtual Hospitals

The future is bright

Health care industry is booming all over the world. In the U.S. it is already the largest service sector and worldwide it is started to be a $ 4 trillion market by 2005. The corporate hospitals will play a positive role in the health care sector by taking the load off government hospitals, whose performance hasn’t been up to the mark.

In the last 5 years, approximately 750 mergers acquisition have taken place in U.S.A hospitals major advantages of merging is more toward more integrated health-care systems, that can achieve economies of scale, by combining capacity& amalgamation of functions such as information technology, consultants, emergency transport, database & research& development. But health care is primarily a local market business & it very important to consider the following factors before going in for mergers: -

1. Relative sizes of the hospitals.2. Their geographical proximity.3. Strength of ties individual hospitals & physicians.4. Degree of unity in leadership structures of separate in

The key to success appears to be a strong orientation to performance as well as standardization & integration work processes, functions, suppliers & investment but not necessarily on a centralized basis for example, Apollo in Chennai, Hyderabad & Delhi will be separated hospitals, post merger, but function will be centralized.

More competition and therefore a more uniform pay structure there may be improvement in both quality & quantity of healthcare available in India.

In India, telemedicine services are not very relevant as yet though with the increasing use of Internet, information regarding health & medicines is being increasingly exchanged.


Thus, the most important modes of trade of healthcare services in the short run would be the category of service providers.

Scope of health care servicesØ gymnasiumsØ alternative medicine centersØ spiritual cleansing centers. (like reiki, yoga etc)

Marketing Mix for Hospitals

PRODUCT

The service product is an offering of a commercial intent having features of both tangible and intangible seeking to satisfy new wants and demands of the consumer, hospital industry is action oriented and there is a lot of interaction with the customers. The service products of the hospitals have the following features:

Quality levelSupporting services play an important role having the quality of Medicare. These services, which include laboratory, blood banks, catering, radiology and laundry, in a true sense determine the quality of services made available by medical and paramedical personnel. AccessoriesThis is a very good way of segmenting customers. Many hospitals provide additional services such as catering, laundry, yoga sessions, cafeterias, etc. for the customers who are willing to pay extra. Hospitals have different wards-General and special. Certain hospitals provide services for the family members of the patients –when they are not the same-city for accommodating and catering. Packaging It is the bundling of many services into the core service. E.g. Apollo hospital offers a full healthcare checkup to the patients. Product LineHospitals through their services offer many choices to the patient and cover a wide range of customer needs. For example: Apollo has a dental department, cardiology department etc. and within the dental department it has dental surgery, root canal, etc. Brand nameHospitals, to differentiate themselves and their services from others use a brand name. The intangibility factor of the service makes it all-important for the hospitals to do so.

Government Hospitals:

This as a product is fairly good. In some hospitals like J.J. hospital, Mumbai they provide quality services at cheaper rates and also is technically well equipped. But most of the government hospitals in spite of government grants do not provide quality service. Hence it is perceived as of low quality.

Private hospitals:

Private hospitals like Bombay Hospital, Apollo are well equipped and the services provided are of good quality but they charge huge price for it. Hence the middle-income group perceives them as elite class hospitals.

PLACE

Incase of hospitals the location plays a very important role. The kind of services a hospital is rendering is also very important for determining the location of the hospital.

Example: Tata Memorial Hospital in Mumbai specializes in cancer treatment and is located at a center place unlike other normal hospitals, which you can find all over other places.

In a country like India which is geographically vast and where majority of the population lives in the rural areas place factor for a hospital plays a very important role. A typical small


village or town may be having small dispensaries but hey will not have super specialty hospitals. For that they will have to be independent on the hospitals in the urban areas.

PEOPLE

Under hospital marketing mix people includes all the people involved in the service providing process which includes doctors, nurses, supporting staff etc. the earliest and best way of having control on the quality of people will be by approving professionally sound doctors and other staff.

Hospital is a place where small activity undertaken can be a matter of life and death, so the people factor is very important.

Under hospital marketing a right person for the right job has to be appointed and they should be adaptable possess versatility. The patients in the hospitals are already suffering from trauma, which has to be understood by the doctors and staff. The people of the hospital should be constantly motivated to give best of their effort.

Government Hospital:

In Indian government hospitals except a few almost all the hospitals and their personnel hardly find the behavioral dimensions significant. Hence even if the patients get the correct treatment they are often dissatisfied with the behavioral pattern of the staff.

Private Hospital:

They have pleasing manners and behave softly with the patients. They provide timely care and are present always in times of need.

PROCESS

Process generally forms the different task that are performed by the hospital. The process factor is mainly dependant on the size of the hospital and the kind of service it is offering.


There is lot of paper work involved in the whole process. Hence the whole process from admission to discharge is tedious.

Private Hospital:

With the advent of information Systems in hospitals all the paper work is reduced and the process is smooth and fast.

PHYSICAL EVIDENCE

It does not play an important role in the health care services, as the core benefit the customer seeks is proper diagnosis and proper cure of the problem.

Physical evidence can be in the form of smart buildings, logos, mascots etc a smart building infrastructure indicates that the hospitals can take care of all needs of the patients.


Government hospitals have a huge building, but are not properly maintained; hence it creates a bad impression among its patients that the hospital is unhygienic.

Private Hospital:

Private hospital like Bombay Hospital has got a smart building, which helps, in developing the minds of the people, the impression that it is the safest option among the different hospitals available to the people.

PROMOTION


Hospitals for promotions use either advertisements or P.R or both after taking in to consideration the target customers, media type, budget and the sales promotion. The health care field has become very competitive. Although one fourth of our population stays in urban India, three fourth of the total doctors have engaged themselves in this part. Word of mouth plays an important role during information acquisition stage of the customers, as there are no objective performance measures to judge the various alternatives available to them. Therefore satisfied past patients of the hospital can bring more number of patients to that hospital than a number of advertisements.

In a competitive market place the images of the firms will affect their competitive standing. One factor that is likely to have significant impact of the health care scene is the growing hospital chains such as Apollo, Birla health centers, etc. artificial heart transplants and other complex operations although are few in number and generate a small potion of the total revenue, they help in generating word of mouth which health care providers are actually interested. Many of these companies are spending a lot in corporate advertising for image building.


They do not undertake major promotion programmes and hence are not very popular among the masses.

Private Hospital:

They undertake extensive promotion. Along with this they undertake massive complex operations which if successful create a good brand value of the hospitals.

PRICE

Pricing in Government / Trust Hospitals

In the Indian setting where a number of persons are below poverty line it is challenging task to formulate a pricing strategy, which is successful in serving the social interests and generating profits. Hospitals need to invest a lot in sophisticated equipment and technologies to improve the quality of medical aid. Even the affluent sections of the societies expect; low cost services form the social institutions in general and hospitals in particular the task of services innovative in line with latest developments in field of physical sciences is difficult. It is due to this that the most government hospitals are in deplorable condition. The ex-checker finds it difficult to finance hospitals and further, the government regulations also close doors foe generating finance from internal sources. The ultimate sufferers are the society and specially the poorer sections. Since the affluent sections have the options to avail the expensive medical services made available by the hospitals. The societal marketing principles make can advocacy in favor of protecting the public interests but it not meant that the hospitals have a uniform pricing/fee structure for all the users. The fee strategy for all the hospitals should be in proportion to the incomes of users, which would engineer a sound foundation for qualitative or quantitative improvements.

For social institutions like government hospitals a discriminatory fee structure is preferred since it provides even the weaker sections of society, an opportunity to avail the quality medical services. This enables hospitals to innovate services to keep pace with the latest developments in the medical sciences.


1. 2.

3. 4.

Pricing in Private Hospitals

Cost based pricing: Price = Direct costs + overhead costs + profit margin. In hospital services, this method is cumbersome because the tracking and identification of costs are difficult. Fee for services, however can be used by doctors. Notwithstanding, some hospitals in the private sector follow this method.

Competition based pricing: using other price as an anchor for the hospitals price, heterogeneity of service across and within providers makes the approach complicated.

Demand based pricing: Cost based pricing and competition based pricing do not consider certain criteria. Demand based pricing involves price setting consistent with customer perception of value. Prices are based on what will par for the services provided.

Perceived Value

What customer perceive about value Service offered accordingly

Value is low price

Could be offered on weekends

Health spas in off season

Differentiated as incentives

Free consultation by dentist/doctors

Value is everything I want in servicePrestige pricing-health club

Bombay hospitals of Arabs (value is high quality)

Value is the quality I get for the price I payMarket segmentation pricing based on affordability

to pay, value is affordable quality

Value is all that I get for what I giveValue is getting excellent treatment in shortest

possible time e.g. treatment in Mumbai hospital, Breach Candy, Jaslok.


Government / Trust Hospitals

FEE/CHARGE

Cost + surplus to make up the losses

of 1.

Discriminatory Pricing

FREE(For no income

group)

Subsidized(For low-income

groups)

Cost + losses from 2(Middle-income

group)

Patient brought in emergency to the hospital

Perceived value is the customers overall assessment of the utility of a service based on perception of what is received and what is given.

Differential pricing in the hospital industry happens

Externally (between 2 hospitals) Internally (within a hospital)

Externally:

Between two hospitals, even to provide the same treatment, the prices differ. Even though the operation to be done might be the same, pricing differs due to the kind of service provided pre and post operation. Cost is associated with the kind of service you provide, and so the hospital is bound to charge the patient for it.

Internally:

There is a price differentiation even between the two wards of the same hospital. There is difference between the general ward and special ward where the rooms are air-conditioned and extra services are provided. Thus the pricing would be different. Even the doctors visiting fees/consultation charges are different. Sometimes if the patient is very poor then the doctor may halve his fees.

In a hospital the process is divided into the following phases:

The joining phase, The intensive consumption phase, and The detachment phase and feedback.

Now we will be considering the process blueprint of an Emergency / Police Case

Price and quality


Police Case Non - Police Case

Inform the local police Patient rushed to the Emergency

Police arrives Attended by the doctors

Inquiry by the police at the hospital

Patient stabilizes

Statement of the patient Relatives/patients have to do the paper work, pay the deposits and complete all the formalities of the hospital.

‘Price is the indicator of service quality’. It is an attraction as well as a repellent variable. Customers use price as indicator of quality depends on many factors including other information available to him.

When service cues to quality are readily accessible when brand names provide evidence of reputation of hospital, customer may use their cues instead of price. Otherwise they think that the price is the best indicator of quality. It should convey appropriate signal regarding quality. Pricing too low can lead to inaccurate inferences about the quality, pricing too high can set expectations that may be too difficult to match in the delivery. Price is used to judged quality because of the experience and credence properties of services as opposed to goods. Excellent hospitals like Mayo Clinic, Massachusetts General, TMH, and Sloan Kettering are a mega brands. They have a great brand reputation and can charge a premium based on sheer perception of quality because of socio-economic issues, poverty levels, government owned hospitals cannot think of profit objectives. It is a social marketing process of enhancing the well being of individuals.

Off late however the government has proposed to state government that those who are above poverty line should pay the cost for treatment. In private hospitals, where the profit is most important objective, premium can be charged. The price paid by customers depends on how he perceives the quality of service. E.g. Bombay hospital, Breach Candy and Jaslok they have a high reputation for quality services.

The services marketing triangle

Company: Here, the hospital is the company that dreams up an idea of service offering (treatment) which will satisfy the customer’s (patient’s) expectations (of getting cured).

Customer: The patient who seeks to get cured is the customer for the hospital as he is the one who avails the service and pays for it.

Provider: Doctor, the inseparable part of the hospital is the provider, as he is the one who comes in direct contact with the patient. The reputation of the hospital is directly in the hands of the doctor. A satisfied patient is a very important word of mouth promotion for the organization.


HOSPITAL

PATIENTDOCTOR

TELECOMMUNICATIONS SERVICES

Introduction

Telecommunication is one of the prime support services needed for rapid growth and modernization of various sectors of the economy, the sector has grown rapidly in recent years, its growth needs to be accelerated further. It is also one of the fastest growing sectors in India and has immense potential for growth. The Telecommunication activity is commercial in nature and people are willing to pay for it. Of all infrastructure sectors, it is perhaps best suited for private sector participation which would help to create competitive environment and improve quality of services to consumers.

Private investment is expected to play a major role supplementing the efforts of the public sector in expanding capacity and also providing competition with the system. In the area of value-added services, the private sector would continue to play a dominant role. The quantum of investment by the private operators would basically be determined by the rate of return on such investments – both basic as well as value-added services.

The Telecom sector has witnessed some fundamental structural and institutional reforms in past decades. Telecom equipment manufacturing was completely deregulated in 1991. Value-added services (including cellular services) were thrown open to private sector participation in 1992. Basic Services were opened to private participation in 1994 by dividing country into 21 Telecom Circles and allowing one private operator per Circle to compete with DOT (DEPARTMENT OF TELECOMMUNICATION). An Independent Telecom Regulatory Authority of India was setup in 1997. A new policy for Internet Service Providers (ISPs) was announced in 1998 allowing independent services providers to enter the sector ending the earlier monopoly of VSNL.

Telecommunication Marketing : Concept

Characteristics of the Telecom Sector

SupplyIntense competition has resulted in prompt service to the subscribers. However, smaller towns and villages continue to have waiting periods on account of non-availability of adequate infrastructure.

Demand Given the low penetration levels in the country and continuously falling tariffs, demand will continue to remain higher in the foreseeable future across all the segments.

Entry and Exit Barriers Telecom industry is characterized by high entry and exit barriers. Service providers need to invest huge capital to build or hire the necessary infrastructure for providing services to customers. For e.g. Tata Teleservices in India invested an amount of Rs.7, 533 crores for setting up the required infrastructure. Because of the high cost of capital involved, in most countries, the government owned telecom service organization enjoys a monopoly. Thus, the telecom industry is heavily-regulated by the government. Even in an open industry where the private players are allowed to operate, if a player finds it difficult to compete and wants to quit the industry, finding a right buyer is a formidable task. The buyer should be willing to pay the huge amount, enter the market and face the challenges.

Bargaining power of suppliers Improved competitive scenario and commoditization of telecom services has led to reduced bargaining power for services providers.

Bargaining power of customers A wide variety of choices available to customers both in fixed as well as mobile telephony has resulted in increased bargaining power for the customers.


Competition The entry of fourth cellular player and commencement of WLL services has resulted in intense competition in the bigger cities. Reducing tariffs will hurt the new entrants, as they will be unable to recover their high capital investments.

Market segmentation

Market segmentation is the basic step for any service provider before deciding on the segment to be served and the marketing strategy required to serve it. The market for telecom industry can be divided into following segments based on the consumer-

Individual The most important segment is that of individual customers or households. Because of the monopoly of government owned telecommunications sector in India people earlier paid very high prices. After the basic telephone services were opened for private players in 1994, many players entered the market and the prices came down owing to competition. The number of individual users for telephones increased significantly, as the reach improved and service efficiency increased. India however lags behind many other developing countries in telephone line density.

Following table gives the brief idea of the teledensity in some developed or developing countries of the world:-

COUNTRY TELEDENSITYUKAustraliaUSA BrazilChinaIndiaSri LankaIndonesiaPakistanNepal Bangladesh

143.13126.18116.4342.3842.3210.389.579.174.421.701.56

CorporateCorporate communication includes the communication of informationbetween two units in two different locations of a city, of a country or in two different. countries. Business communication can take any form, telephonic conversation letter, e-mail, and fax etc. It is important that the message be conveyed clear and fast, without any distortions for the business to function effectively and efficiently. Telecom industry' relics heavily on the corporate sector for it's business. The corporate sector contributes to the heavy traffic on telephone lines during the daytime. This has led the telecom companies to offer lower tariffs in the early mornings and late evenings to shift the demand when most businesses arc closed.

RuralDuring the monopoly of the government owned service providers, the worst affected customer was the rural customer. The reach was bad and the quality of service provided was even worse. The telecom revolution of the late '80s and early '90s saw a change in the rural telecom scene. Because of the government's initiative to lay down cables in rural areas and provide basic telephone services at subsidized prices, the reach of telecom services to remote areas has improved. The efficiency of the services has also improved.

UrbanIn urban areas, the number of telephone subscribers is significantly higher than rural areas. This is because of not only the available infrastructure but also the presence of educated masses, which arc comfortable using technology and therefore use it more frequently. In fact, Urban India has grown to become dependent on telecom services. This is one of the reasons why most


cellular service providers start their business in the cities first and then proceed to capture the rural areas.

On the basis of the product/service offered, telecom industry can be divided intofollowing segments -

1. Fixed wire line/wireless services2. Mobile services3. Internet services 4. Video telecom services

Marketing strategy

Telecom service providers need to design an appropriate marketing strategy to face the competition and survive in the market. Following are some of the important steps required by the management to design an effective marketing strategy.

SWOT Analysis Telecom players should analyze their own strengths and weaknesses vis-a-vis the opportunities and threats in the market. Suppose a telecom player has an innovative service offer and efficient service personnel to market them. These are his strengths. However, say he lacks the resources to adopt advanced technology and promote the services aggressively. To overcome these weaknesses, it can always tie up with strong players in the telecom market or other related industries. For example. Birla tied up with AT&T to gain from the reputation of latter in the telecom industry. Telecom players should also carefully analyze the threats and opportunities posed by technology, competitors and the external environment, and formulate suitable strategies to overcome threats and exploit opportunities.

Demand Forecasting Telecom players should conduct a market survey to analyze the demand for various services among the target customers. For example, when telecom companies saw the need for written message transfer from the sender to the receiver, they introduced the concept of SMS (Short Messaging System).

Service Strategy: Telecom players should constantly upgrade their services to meet changing customers' needs. For example, cellular service providers initially offered only the basic communication services. However, customers now expect and demand subsidiary services like call waiting, call holding, automatic alerts, sports information etc.

Pricing StrategyTelecom players need to determine the price of their services carefully. If they price their services too high, above the perceived value by customers, customers might switch over to competitors offering those services for lesser prices. On the other hand, if they price their services too low, they would not be able to recover the cost and thus get into losses. Normally, service providers in this industry use pricing methods like cost-plus pricing, target profit pricing, break-even analysis and prevailing value pricing. If all the players in a market are offering similar service and similar supplementary services and other benefits as well, a telecom player aiming to penetrate the market has to price its service lower than others. Sometimes, government policies and regulations prevent telecom players from having control on price factor. For example, in India. TRA1 (Telecom Regulatory Authority of India) wields control over the telecom industry.

Positioning StrategyTelecom players need to identify the different segments that need different services and position their services for die targeted segments. When there were only a few players in the mobile communication services segment, the tariffs were very high. Airtel positioned its services exclusively for the higher-income segment. At that time. Airtel charged Rs. 16 per minute. When the tariffs were reduced after many private and government players entered cellular services market, pulse rates came down. Airtel then repositioned its services for the common man.


Promotion StrategyTelecom players should choose the promotion medium depending on the kind of services they offer. For example, in India, if a telecom player wants to target young people belonging to the middle and upper class families, they can choose a medium like the Internet or billboards near colleges, parks, restaurants, movie theaters, etc. Moreover, telecom players need to allocate budget for advertising across different media wisely. Thev have to determine the money to be spent for advertisements on TV, radio, newspapers, magazines, billboards, and other media. When Airtel introduced pre-paid cards that customers could choose depending on their monthly budget for communication services, it advertised in all kinds of media with special emphasis on TV.

Such events enable organizations to generate awareness about their services among target customers. Telecom players can also advertise their services by setting up attractive service outlets. In addition, they distribute signboards to retail stores marketing their services. For example. Hutch gives signboards to retail stores that sell its prepaid phone cards. ImplementationFraming the marketing strategy will serve only half the purpose of the organization. It is only when the strategy is implemented successfully that the organization realizes its goals and objectives. However, management often faces many challenges in implementation. Strategies are based on certain assumptions regarding the market potential, demand, and competitive environment. Telecom industry, where technology and customer expectations change fast, all these variables also change rapidly. Therefore, the management has to continuously monitor the telecom environment, revisit their strategies from time, and revise their plans and targets accordingly.

Rationale behind Telecommunication Marketing

We find justifications for practising the principles of modern marketing in the telecommunication services. There are a number of reasons for conceptualising marketing.

1. To make possible qualitative improvements in the service profile: It is right to mention that except a few almost all the service generating organisations are required to improve the quality of their service profile. The marketing professionals make a strong advocacy that the application of marketing principles would activate the process of qualitative transformation. They argue that the application process would make possible innovation which would help in designing a sound product portfolio. The services would be of world class which would be efficacious in motivating the prospects and users. The marketing information system would help professionals in developing a sound information base that would let them know the changing needs and requirements of users. Thus the quality of services would be improved. We are aware of the fact £hat sky is the limit for quality. Of late, we find a different perception of quality which would, of course, be found outdated with the development of a new perception. The perception keeps on moving. The information acts as a vehicle. With the sophistication in the process of telecommunication technologies, we find a frequent change in the perception of quality.

2. To make possible quantitative improvements: In a country like India, it is significant that communications network are channelised to all the regions so that almost all segments of the society get an opportunity to avail the services. It is advocated that application of marketing principles would make the organisations commercially viable and financially sound which would energise the process of development and expansion. We find relevance of information even to the agricultural sector of the economy. This makes it essential that telecommunication services are made available to all the regions and all the sectors evincing their interests in getting the same. It is almost clear that an organisation with a sound financial health and a positive attitude of the boardrooms would succeed in expanding the network. With the development of satellite communications, we find copious avenues for development even in the rural areas of the country.


3. The cost-effectiveness is made possible: Economy in operation is considered essential to make the services affordable to the users as well as profitable to the information-selling organisations. The application of modern marketing principles makes possible cost-effectiveness since the marketing professionals bear the responsibility of optimising the costs of offering the services. There is no doubt in it that by conceptualising marketing, the telecommunication organisations would be successful in regulating the unproductive expenses very much instrumental in making the process cost-ineffective. Though we find a seller's market till now existent in which an organisation succeeds in selling the services even though the tariff structure is high. Of course the high structure of tariff jeopardises the development process and therefore it is professionally sound that the structure is made rational.

4. Commercial viability is maintained: We can't negate the fact that with a quality service profile, an organisation finds it convenient to maintain commercial viability. This is due to the fact that we find a significant increase in the number of users. The tariff rate may be low but the total profit is found high. The operational economy and the tremendous market potentials make ways for the profitable selling which in the due course helps an organisation in maintaining commercial viability. A commercially viable organisation finds it easier :: cycle the process of development.

The marketing principles focus on performance-orientation which makr; possible a high level of efficiency that is found significant to accelerate the rate of productivity. This also helps telecommunication organisations in increasing the rate of profitability.

5. Satisfaction to users: We consider marketing a customer satisfaction engineering. The innovation in the process of formulating the service profile, an in-depth study of the changing level of expectations of users and development at marketing inputs in tune with the changing needs and requirements are some the positive contributions which helps in satisfying the users. Creative prom * tional measures inform, sense and persuade the users in a right fashion. In thf marketing process, it is much more impact-generating that an organisation signs an overriding priority to the satisfaction index since by doing such the professionals find it easier to formulate the product mix in the face of changing of expectations.

6. Projection of a fair image: You are suitably rewarded for your effete build up a fair image by offering quality and economic services to the users, if the telecommunication organisations succeeds in formulating a sound service profile, the task of building a positive image is done. And if the process keeps -:c moving, the creative promotional measures make possible a positive projection Of course we find it against the business ethics that you continue the process :c exploiting the users since the intensity of competition is almost dismal. Ths marketing professionals may help the telecommunication organisations in projecting a fair image by sharpening the instrumentality of creative promotions measures.

7. A rational tariff structure: There are a number of positive developments in the process that make ways for designing a rational tariff structure, a rational tariff structure, our emphasis in on making the structure optimal on the one hand generates profit to the organisation while on the other hand makes the services affordable.

Even by adopting fair and legitimate practices, we can be successful in making profits. The marketing principles would help the telecommunication organisations in many ways. But the main thing is the realisation of the boardrooms. If they have a positive attitude and the employees working there are found efficient, we find tremendous opportunities for making profits to be capitalised on. The marketing practices bear the potentials of transforming albeit negative into positive provided we have world class marketing professionals. The increasing unfair and illegitimate practices in almost all the public sector organisations make it essential that the Development of Telecommunications, Govt, of India assigns due weightage to professional excellence.


Marketing mix

Unlike manufacturing organizations that focus on the four P's of the marketing mix, service organizations need to concentrate on seven P's. i.e. product, price, place, promotion, people, physical evidence and process. Let us discuss how telecom service providers attempt to design these seven P's to constitute appropriate marketing mix and face the challenges in the telecom industry:

PRODUCT/SERVICETechnology and the changing needs of customers have prompted the telecom industry to introduce different products, services and their variations to the customer. This has also helped some of the players create a market for their services, instead of competing with other players in the cluttered market. However, telecom players are forced to continuously introduce innovative services to sustain and thrive in the highly competitive market. The various products and services offered by telecom industry are discussed below.

Fixed land line/wireless servicesFixed landline service allows customers to communicate only from a particular place. The common landline connection offered by BSNL and other players is the basic service. Fixed wireless service offers more mobility than the fixed landline but that also has its own limits. Fixed land line/wireless services offer following services to customers:

è Short distance services: These services allow users to communicate with people within a given region. è Long Distance services: Long distance services can be further divided into NLD and ILD services. NLD (National Long Distance) services allow a customer to communicate with people residing anywhere in the country. ILD (International Long Distance) services allow the customer to communicate with people residing anywhere in the world.

Mobile servicesMobile services allow customers to communicate while on the move. Mobile service providers divide a region into cells and establish a radio base station (RBS) in each cell. All RPSs are connected to a central switching center from where the entire system is monitored. Mobile service providers offer limited mobility and roaming facilities. Limited mobility allows users to communicate within a given area. Roaming facility allows users to communicate over the mobile, wherever they are in the country (international roaming is also offered by some service providers). For example, a customer from Mumbai can use his mobile effectively even when visiting Hyderabad using the roaming facility. Mobile services can be categorized as follows:

Cellular phone service: It includes satellite mobile communications service, in-flight telephone service, packet communication service and cellular services.

Personal Handyphone System (PHS) service: Personal Handyphone system (PHS) works as a cordless phone at home and as a mobile phone outside. PHS services are offered on personal digital assistants (PDA) and notebook PCs.

Pager service: It enables users to receive text messages. The person who sends the message bears the cost while the person owning the pager pays subscription. This service is now also available on mobile phones in the form of SMS service. SMS service has become a great marketing tool and is being used by many companies to promote their products/services. Companies conduct contests where the audience/customers are required to respond through an SMS.

InternetIt allows people to access information including text, voice and images from anywhere in the world and in real time. For example, a person in India can send written messages to his friend in the US. talk to him and even view the image of his friend on the computer monitor.


Video telecom services They include video conferencing, videophone, videotext, etc. They are used by various sen ice providers including road transportation, railways, airways, corporates, banks, hotels, educational institutes and government departments.

PRICEService providers can use cost-based, competition based or demand-based pricing. Most service providers in the telecom industry today are resorting to competition based pricing, which has led to low prices of the services. This has proved to be quite beneficial for the customers, but the telecom companies are struggling to make profits.

In the fixed line industry, customers have only one option of payment, that of post-paid. That is, customers pay a fixed amount as rent and the usage charges at the end of the billing period, in cellular industry, service providers offer two options to customers, pre-paid and post-paid. In case of prepaid service, customers buy a card available from retail outlets to activate or recharge their service. The price of the card covers the rent fixed by the service provider plus the cost of certain amount of airtime. For example, Airtel offers different cards with different amounts of airtime and allows its customers to choose from them depending on their need. Though initially, prepaid service was available only for mobile phone users. BSNL is now making prepaid service available for landline users also. In case of postpaid service, depending on the number of calls made by the customer and other services used by him, a detailed bill is prepared and sent to the customer. The total amount to be paid by a customer per month depends on the rent and the services used by him. The customer can make the payment by cash/cheque/credit card at one of the service provider's outlets. Some service providers also allow online payment through Internet. BSNL and MTNL for example allow their customers to make online payment.

PLACEWhen DOT/BSNL was the only service provider, customers had to go to different locations for different services. Applications for new telephone connections or for transferring a connection from one place to another were accepted only in one major telephone exchange located in the city. Bill payments were accepted in local telephone exchange office located in certain areas. One had to personally go to the office, stand in the queue and make the payments. There was another department for receiving complaints. It took a long time, even a year, to obtain a telephone connection. Complaints remained unattended for several days after a customer registered his complaint with the local telephone exchange.

After the entry of private players like Tata and Bharti, things have improved. Most private players have offices at various locations and provide multiple services through them. They are also accessible through the internet. BSNL too set up offices at multiple locations to accept applications for new connections, transfers and payments. For example, Mobile service providers like Airtel. Hutch and Reliance Infocomm have one-stop shops where customers can purchase handsets, get new connections, subscribe to various value-added services and pay their bills.

PROMOTIONTelecom service providers use direct marketing, advertisements in newspapers, T.V., Radio, billboards in public places, etc. to promote their services. In 2002, Airtel used a TV commercial endorsed not by film stars or sports stars but by a successful music composer, A.R. Rahman to promote its brand. Rahman also composed five exclusive symphonies downloadable as ring tones for Airtel users. Telecom services also sponsor some contests or events to attract public attention and gain wide publicity. For example, in 2003. Reliance Info sponsored a contest for a successful Bollywood film, Kal Ho Na Ho.

Owing to the intense competition in the cellular service sector, the promotion campaigns are quite innovative. Hutch for example launched an advertising campaign using a small boy and his pug, which caught the attention of customers. Hutch also offers discount coupons to its customers, to be availed at various restaurants and lifestyle stores across the city. This helps the company retain its customers and also attract new ones.

PEOPLECustomer orientation is crucial to telecom service providers in winning new customers t and retaining the existing customers, when customers report any problem with the service, service provider should send people immediately to get the problem rectified. However, when


BSNL/DOT enjoyed monopoly, service personnel did not turn up for days together even after customers reported a problem. The fact that it was the only service provider resulted in excessive load as well as complacency. However, with the entry of private players like Tata Teleservices into the industry, things changed. The new private players emphasized customer satisfaction. They ensured that their service personnel answer customer queries promptly and professionally and attend to their problems immediately. This has brought a change in the working of the telecom industry as a whole.

PHYSICAL EVIDENCETelecom service is intangible. A user cannot judge the quality of the service offered by a service provider unless he uses it. Telecom service providers however offer some tangible products to customers to service as physical evidence. They provide customers with a telephone directory that includes names and addresses of all their subscribers. Every year, an updated directory is provided to all subscribers free of cost. However, mobile service providers do not provide such directory because mobile phones are considered personal devices. Reliance Infocomm. However, makes the information about mobile numbers and names and addresses of its subscribers available on reliance network. Telecom service providers also focus on the voice instrument given to customer. When Tata Teleservices entered telecom sector, it gave sleek and attractive looking phone instruments to its subscribers to compete with the phone instruments supplied by BSNL at that time. Later, BSNL also began to focus on the looks of phone instruments given to customers. Telecom service providers also focus on ambience of their service outlets. Reliance Info invests about Rs. 30 lakhs to one crore on building its service outlets.

PROCESSTelecom service providers should offer reliable, continuous, quality service to customers. When Tata Teleservices entered the telecom industry, its sales executives visited individual homes, shops and organizations identifying people in need of a phone connection and quality service. If a customer asked for a phone connection, he got it within three days. Now BSNL has also improved its service processes. It has a computerized system that receives complaints from customers round the clock and service personnel attend the customer within 24 hours. One can also obtain the bill information by contacting the number provided for the purpose. Telecom service providers also send detailed bills on request, describing the number called, amount of time spent on the call and the charges incurred. They should however ensure that errors are not committed in billing. This can be a major source of dissatisfaction for customers. In the past, many customers had complaints against BSNL of overcharging them. Some customers who could not settle the issue with BSNL got their phone disconnected and switched to other players. Therefore, telecom players should strive to send error free bills to customers. They should continuously strive to improve their service processes. However, telecom service providers should try to achieve improvement in service process without incurring additional costs in doing so. This is especially important because of increasing competition in the telecom sector.

Telecommunication Marketing In Indian Perspective

We can't negate the fact that after the attainment of independence and to be more specific during 1980s and 1990s, the telecommunication services, have made rapid strides both in quality and quantity. However the users at large are found dissatisfied with the quality of services made available to them. The process of technological sophistication has gained the momentum but the users are yet to get the quality services. The level of efficiency is found disappointing which is found instrumental in decelerating the rate of productivity. This makes it essential that we go through the problem with a new vision. It is against this background that we make a strong advocacy in favour of the application of aggressive marketing principles in the Deptt. of Telecommunications.

The managerial proficiency is felt essential at the different stages of operation. The professionals and technocrats have to find out the ways which make possible qualitative improvements in the Telecom services. Since we have an agrarian background, it is pertinent that we also focus our attention on the problems of rural economy. The domestic, commercial, institutional sectors expec: world class services. The management experts feel that the telecommunications department needs to conceptualise marketing which on the one hand would improve the quality of services while on the other hand would also make ways for the generation of profits. Not only this, the services would also be made economic because the unproductive expenses would


considerably be regulated. This draws our attention on the formulation of marketing mix in the Indian perspective.

Innovation in technologies has resulted into a frequent innovation in the service profile which has made possible a qualitative change. In this context, we find data services playing an important role. Data communication is a powerful means of communication that uses digital form of information in which the speed and accuracy of information are superior to other forms. This form of modern communication facility is provided by the Department of Telecommunications for better services to Business, Industry, Commerce and other users. All non-voice leased services utilising a wide band, speech band or a band narrower than 3.4 KHZ are treated as data service. The customer can also book documents for transmission to international FAX members. The services are found useful to almost all segments of the users. The Department of Telecommunications needs to assign due weightage to the same in the service mix. The Facsimile service enables the transmission of documents, graphics, handwritten materials, signature etc. using any script. An exact replies of the original document is received at the receiving end. There are two types of facsimile apparatus, one for transmission of photographs and another for transmission of documents. It is an excellent vehicle for transmitting graphics, handwritten materials, signature or documents in which we find accuracy in transmission. These services may be instrumental in generating more revenue provided we promote them in a right fashion.

The Department of Telecommunications needs to promote the services with the help of all three media, such as print media, broadcast media and the telecast media. However they need to concentrate on print media since in addition to economy, it is also to make available to them adequate space for presenting information. Of late we have sophisticated print technology and quality print materials that would make advertisements more attractive and proactive. It is pertinent that we seek the cooperation of leading advertising professionals for making possible creativity in the promotional efforts. While advertising the new services, they need to focus on the salient features of the services to be included in the service profile. In addition, they can also advertise through broadcast and telecast media but they have to be careful that the promotional expenses are found productive. The publicity measures, personal selling, word-of-mouth communication, sales promotion and telemarketing would also be helpful in promoting the business. While selecting a constituent or while formulating a mix of different constituents, it is pertinent that the professionals assign due weightage to creativity. We promote the services which help the Department in informing, sensing and persuading the prospects and users and therefore we also need to strike a balance between the services-advertised and services-offered.

For the telecommunication organisations it is significant that they at the outset improve the quality of services and only then think regarding the direction of promoting the same. The tariff structure is an important decision making area which draws due attention of the professionals. In any case, we are not supposed to invite cost-price-squeeze by making the social costs and unproductive expenses disproportionate. The Department needs a free hand while setting the structure. The involvement of government in the process would jeopardise everything. It is right to mention that in the Indian perspective we find government interfering in the pricing and other decisions which has been making the ways for a number of complications and problems. The financial imbalance is, of course, the result of government interference and therefore it is significant that we depend on the professionals.

If we find an increase in the costs of inputs used; if we find an increase in the administration bill, it is natural that the tariff structure is revised in the face of multi-dimensional changes. If we fail to do such, the costs of services would go up but the telecommunication organisations would find it difficult to make a revision in the structure which in the due course would aggravate the problem of financial crunch. It is against this background that we make a strong advocacy in favour of freedom in setting the tariff structure. There is no doubt in it that professionals are well aware of their limits to social costs and they are supposed to adjust the same in the face of financial health. If they are financially sound, we find scope for increasing the social costs and therefore the most important thing in the process is to make the tariff structure rational. It is the responsibility of the professionals to regulate the unproductive expenses so that the services are made cost-effective.


The existent work culture in the public sector organisations in general and the telecommunication organisations in general and the Department of Telecommunications in particular makes it clear that we have everything except the quality personnel.

In view of the above, it is right to mention that the first and foremost task before the Department of Telecommunications in the Indian perspective is to improve the quality of employees. In addition to other aspects, the boardrooms need to change their attitudes.


COURIER SERVICES

The concept

In today's business environment, the value of time is immensely important. The changing macro economic factors such as globalization of markets, removal of barriers on trade and business and increased competition have enhanced the need of delivering goods and services in timely and reliable manner. The development of Indian express industry can be dated back much earlier; however the decade of eighties saw the real entry of professional players into this market. Since then the industry has been growing at a steady rate and providing services to the customers at large.

In this report the term “Express industry” comprises courier companies providing express and door-to-door pick up and delivery services for documents and non-documents shipments other than freight to various domestic and international destinations. Domestic services would include express and door-to-door pick up and delivery services to the various destinations in India through air and surface mode. The international services would include pick up and delivery of inbound and outbound shipments to India mainly through air.

The consignments handled by express companies can broadly be classified into two types’ viz. documents and non-documents. Any material comprising of paper such as correspondence, bill/invoices, brochures, catalogues, manuals, annual reports, account details, books, files etc. are categorized as documents. The non documents consignment would include items that may/may not have commercial value such as samples, CKD units, small machineries, electronic parts and goods, spare parts.

Characteristics of courier industry

Before entering the courier industry, a player should know the characteristics of theindustry and then evaluate his own ability to survive in the industry while competingwith other players for a market share. Courier industry has the following characteristics:

Entry and Exit BarriersThe courier industry is not heavily regulated by government. The state-owned package transportation service providers fail to give tough competition to private players unlike the telecom industry where the stale-owned service provider is a major competitor. However, the service provider has to be prepared to invest heavily in infrastructure, distribution network, technology and manpower training. In addition, a courier service organization that wants to serve customers with overseas transportation requirements needs to spend on brand building and develop tie-ups with international carriers like UPS, FedEx and DHL. This is because it might be practically impossible for the company to set up a strong global network on its own. Though there are no barriers set up by the government to exit the industry, the players may face some difficulties if they decide to exit. This is because courier service organizations tend to invest heavily in infrastructure, logistics and brand building. They may find it difficult to get the right price when they want to wind up. However, local players who do not make huge investments in infrastructure and assets, but rely on the local network, can quit the industry with ease.

DependenceThe growth of courier industry is highly dependent on the growth of other industries, rate of growth of economy, growth in imports and exports business, etc. If there is decline in any of these, there will be a decline in growth of courier industry as well. This is because, apart from individual customers, the service provider mostly serves other marketers. Therefore, their business is dependent on other businesses and their growth.

CustomersCustomers demand quality service. They want the service provider to deliver their packages within the promised time and in perfect condition. In addition, they want the service at competitive price. They also expect the service provider to provide the latest status of their shipping whenever they contact the customer service representative for information. They expect


the service provider to provide a pick-up and drop point within their reach Apart from these expectations, courier service providers also need to face intense competition from both organized and unorganized players in the industry.

Market segmentation In order to be able to serve customers effectively, courier service providers need to segment their market and understand the needs of customers in each segment. Based on this understanding, they can decide which segment to serve and how to position the service in the customer's mind using the seven P's. The market for courier industry can be divided into following segments:

IndividualThis segment consists of personal letters, envelopes, packets and cartons that need to be delivered to various destinations within the service limits of the service provider. Sometimes these deliveries may also need to be made to other countries in the world. For example, customers can send Alphonso mangoes to their dear ones abroad, using the special services of DHL; called the DHL Mango Express.

CorporateThis segment consists of official letters, documents, product samples, products etc. to be delivered to destinations within the country or outside the country. For example, a chemical company may send samples of material prepared by it to a client iii the same country and an equipment manufacturer may send a machine to overseas client on order. Corporate also send special gift to their clients when it is festival time.

Small and Medium enterprisesThis is also an important segment for players in the courier industry. Though leading players in the courier industry like DHL ignored this segment initially, they are now concentrating on this segment as well in a bid to expand their business.Based on the type of delivery, courier industry can be divided into the following segments:Same day delivery: In this segment, goods are delivered to the destination the day they are collected from the customer. However, the same day service is offered only to destinations within the country.Overnight delivery: In this service, shipments arc delivered the next day or later depending on the distance to be covered.

Marketing strategy

People opine that courier service is simple and one can just start earning profits by buying a few vans and delivering letters and parcels using them. However, to compete and survive in courier industry, service providers need to be professional, customer oriented, and capable of delivering shipments to various destinations safely and quickly. At the same time, they need to ensure that they maintain their profitability. This needs a well-formulated marketing strategy. The strategy should include the following elements:

In order to come up with possible solutions to counter the challenges by courier service provider it is necessary to understand the environment under which Speed Post is operating. This can be done by understanding what are the Strengths, Weaknesses, Opportunities and Threats faced by it.

Strengths Weakness

Good network especially domestic Price – a definitive advantage Minimum weight – a unique feature

Yet another government organization Levels of service not at par with competition Positive consumer perceptions need reinforcement

Opportunities Threats


Domestic market (Primary) – Good scope for growth Can use rates and minimum weight to advantage Can capture potential markets more easily

Competitors more market customer driven Faster response by competition to market needs Customer expectations going up Perceived as less customer driven Fluctuating air tariff rates

If courier service provider has to achieve the above objective, it will have to do the following from the above Strengths, Weaknesses, Opportunities and Threats (SWOT) analysis, Strengthen its Strengths Neutralise its Weaknesses Convert Opportunities into Strengths Tackle the threats efficiently and effectively

Strengthening the StrengthsTo further strengthen its strengths courier service providers will have to promote them efficiently and effectively to keep the target audience aware of its unique characteristics. For this purpose it will have to design its promotional campaign on the following basis,

The campaign should be focused on the audience to,o Informo Persuadeo Reinforce

To facilitate the smooth implementation of this goal, the following steps will be necessary,o Clear definition of marketing and advertising goalso Themes and schemes which customers want and not Speed post wants to sello Proper distribution and communication of the promotiono Experimentation with new approaches

This will help courier service providers to have a better brand recall rate subsequently resulting into sustainable increase in growth rate in business for the long term.

Neutralizing the Weaknesses

The areas for improvement or weaknesses of courier service provider are primarily related to its staff and the bureaucratic chain involved in business. Because of this the customers are though assured but yet not willing to treat Speed Post as a long term, productive, effective and efficient business partner.

For this purpose, it is primarily important that the Internal Environment of Speed Post be made as competent, determined and performance oriented as the workforce of any other competitor companies in the industry like, FedEx, DHL, First Flight etc.

So HR policies and practices have a major role to play in this field. The HR department can, Hire the best people for the job Develop people to develop service quality Motivate them for personal and performance development Empower them to take decisions Retain them to increase skill set competency Develop Internal Support System to facilitate their working Promote and encourage team work Develop a transparent organization culture Measure and suitably reward performance of each employee Treat employees as the biggest customer.


Motivated and happy employees will lead to higher profits as the Cycle of Success will develop in the organization leading to higher level of business from higher level of retained and new customers. It is difficult to remove the problems arising due to the hierarchal chain, but proper empowerment and motivation will enable employees to be more competent and result oriented in the job.

This will help courier service providers in neutralising the effect of its weaknesses in its overall performance in the industry.

Converting opportunities to strength - Service quality GAP model

Courier services will have to take the help of People and Promotion to help itself achieve the huge potential in the market. This would be effectively done by closing all the service gaps in the service delivery, i.e.

Management Gap: Gap between Management Perception and Customer Expectation

Quality Specification Gap: Gap between Management Perception and Service Quality Specification

Service Delivery Gap: Gap between Service Quality specification and Service Delivery

Market Communication Gap:Gap between Service Quality Specification and Service Delivery

Perceived Quality Gap: Gap between Expected Quality and Experienced Quality

When there are no service gaps in the organization, it will be able to tap the underlying potential and growth prospects in the market.

Tackling Threats

To tackle threats it will be necessary to focus on maintaining the quality of the products, services and process of the business.

These dimensions would be, Reliability of the service Responsiveness of the Service to customer needs Assurance of timely delivery under specified norms Empathy towards the customers problems Use of tangibility spectrum in service delivery

Courier service providers can achieve this by,

Ensuring Top Management Support Proper benchmarking standards Induction of Self Service technology wherever possible Proper complaint handling system Promoting itself as such, that quality is perceived by the customer Working so as to reflect Quality in every activity Empowering employees to monitor quality standards Quality aimed at customer retention Relationship surveys Post transaction surveys Developing quality system with adequate human support, system support and proper

feedback normsThese strategies will help courier service providers to get a better market share in the industry.

Rationale Behind Courier Marketing


We make an advocacy in favour of application of marketing principles in the courier services. A number of factors justify the same. It is right to mention. that conceptualising marketing makes the ways for satisfying the users which happens to be the most important thing for increasing the market share and the level of profits. The courier organisations thus can maintain commercial viability. By formulating and innovating the marketing mix, the courier organisation can be successful in developing and perceiving a new perception of quality which makes possible qualitative improvements in the process. Generation of profits and satisfaction to the users are the two important dimensions which pave avenues for multi-dimensional quantitative-cum-qualitative improvements in the process. The organisations by making the services competitive can be successful in excelling Competition. Since the marketing focuses on professional excellence, the courier organisations can also be successful in projecting a fair image.

These facts make it clear that the application of marketing principles is to benefit the courier organisations in many ways. It is against this background that the leading courier organisations are found practising innovative marketing.

Marketing mix

Customers in courier industry value speed and safety. Now-a-days corporatecustomers look at courier companies to provide them complete logistics solutions. Inorder to serve both individual and corporate customers efficiently, courier companiesneed to give special attention to all the elements of marketing mix. Let us discussthese elements in detail now.

Product/ServiceThe core service offered by courier companies is moving of documents and goods from one place to another. This service is packaged in different ways by different courier service providers to differentiate themselves from competitors. For example, Blue Dart offers door-to-door delivery of all documents and packages weighing below 32 kg to destinations in India, Bangladesh, Bhutan and Nepal. Some goods are perishable or their delivery needs to be made immediately because of commercial reasons. For such needs, most courier companies offer same day delivery service. Courier companies should also focus on branding their services. Some domestic companies enter into partnership with global companies to strengthen their brand and the perceived value. All courier companies have their own logos and attractive slogans that help customers recall the service associated with them quickly. For example, Blue Dart says. "Solutions for peace of mind."

PriceThe type of product being delivered, its weight, the place of deliver., the urgency of delivery, the mode of shipment used, regulatory clearances required and tariffs charged for them, etc. determine the price of courier service. Most corporate clients have a special arrangement with courier service providers. The client gives certain minimum amount of business even month to the service provider and enjoys a special discount on the shipping charges. The service provider in turn enjoys assured and repeated business.Competition can pull down the prices in courier industry. However, the marketplayers should ensure that the minimum costs that they incur on the delivery ofshipment arc recovered If the players reduce prices below this level, it will lead tounhealthy competition and hits the bottom line of most players in the industry, inIndia, Elbee Services, one of the top players in the courier industry, recorded hugelosses and took considerable time to recover.

PlacePlace plays a prominent role in courier industry. Customers prefer their products and packages to be picked up and delivered at their doorsteps. Therefore, courier companies need to develop an extensive distribution network in order to facilitate transportation of shipments to and from various destinations. For example, FedEx has 1250 service centres worldwide. Further, it has partnerships with domestic courier companies in various countries to be able to deliver shipments to various locations in those countries. Blue Dart has franchises and regional service participants (RSPs) to reach remote areas in India. Franchises collect documents and packages


from customers and drop them at the central hub. In areas where franchises could not be established because of lack of enough demand for services. RSPs collect packages for Blue Dart.

PromotionCourier companies generally emphasis on speed, safety, reliability and efficiency of their services. They release advertisements in newspapers, magazines, TV, Radio and Internet. Blue Dart emphasis on its ability to deliver faster because of its own fleet and airfreight, and multiple service centres. The company also advertises the latest technology used by it and the advantages offered by ii DHL mentions the list of offices it has in different countries in advertisements, which is a way of communicating to customers about its extensive network and scale of operations.Courier companies also advertise and publicize their international tie-ups to promote the companies and their services. They also launch special promotional campaigns like the DHL's mango express. If the company delivers "ripe-in-time" Alphonso as promised and satisfies the customers, it can successfully add new clients to its existing customer base.

Physical EvidenceCourier companies primarily offer a service that is intangible. Therefore, they attempt to bring tangibility through other aspects. For example, some courier companies make sure that their offices arc located in areas that are easily accessible to individuals and corporate customers. They also keep their offices neat and well furnished to create a positive impression in customers' minds. For example, Blue Dart maintains well furnished and centrally air-conditioned offices. It even offers free pick-up services to customers.

Courier companies also focus on packaging. The products to be delivered are packed carefully and neatly to prevent any damage to the contents. Most courier companies also have their own web sites, which enable people to track the status of their shipping. This is one of the best tangibles that can be offered to the customer. Blue Dart even allows customers to view the proof of delivery on its web site - a document confirming the date and time of delivers' and signed by the receiver. The documents are also delivered physically to the customer. For some corporate customers, courier companies allow payment after delivery of the package. ;

PeopleIn the courier industry, service personnel interact with customers. Therefore, courier companies need to give special attention to people training. People at the help desk and the marketing executives need to be trained in communication and interpersonal skills. People handling operations need to be trained to use the advanced equipment and provide logistics solutions to corporate customers. The most important element of training is to be customer oriented. In its absence, the courier company would fail to satisfy the customer and lose its business eventually. Courier companies need to strive to retain people by implementing proper compensation and incentive systems.

ProcessThe different steps that constitute the process in a courier company arc picking up documents/packages from individual customers, sorting them according to their destination, placing them in appropriate modes of transportation, taking clearance from regulatory authorities, keeping the customer updated of the status of shipping, delivering the shipment to the right destination and mailing confirmation to the sender.

Courier Services Marketing In Indian Perspective

In India, DHL, Blue Dart, Elbee. Sky Pak and AFL are major players in the courier industry with Blue Dart in the lead position. AFL has recently withdrawn from international operations and decided to restrict its operations to freight transportation within India. Though there arc more than 2000 unorganized players competing with these players at local and national level, the unorganized sector contributes only 36% of total revenues of the industry. Among the major players, Blue Dart owns three Boeing 737s. This enables the company to carry large volumes of packages and make overnight deliveries It can deliver a package submitted at its office by a customer in the evening to any destination (except the very remote and isolated areas) in the country the next day before noon. It also has strategic alliances with various airlines and courier companies of various countries to serve international traffic. It also offers logistics and e-


commerce solutions for corporate customers. Elbee has its own fleet of vehicles but not flights. It depends on Indian airlines and Jet Airway to carry its freight. Both Blue Dart and Elbee serve more than 1200 destinations in the country and have international tie-ups. Blue Dart tied up with DHL while Elbee tied up with TNT for international traffic. Elbee, which performed poorly and went into losses in 1999, is recovering slowly with the improvement in the Indian economy and commerce. Blue Dart has registered an impressive .growth rate. It made profits of Rs.41 crore during the period 2003-2004 and its profitability increased by 26% from the previous year. Skypak and Gati are also picking up with economy still improving, it remains to be seen whether the smaller players can outperform the industry leaders.

The courier industry in India is sustained the growth with emerging business opportunities in various user sector. Liberalization of Indian economy and integration of international trade has attributed to the sustained growth in Express industry. The growing customer requirement and scaling up of operation has led to the heavy investment by the express industry in infrastructure set up, hub and new technology. The Express industry has witnessed fundamental changes in its composition over the past few years, owing to fierce competition in the business. The international sector now constitutes to 41% of the total revenue, as compared to over 50% market in 1990s. During past 4-5 years new association and strategic sales arrangement have been made between companies.

Indian courier industry comprises large organised service providers, EMS Speed Post (Product of universal postal union), regional semi-organised service providers and local un-organised service providers. There are over 2000 express companies operating in this space. The Indian Express industry encompasses service providers, rendering time bound pick-up and delivery services of documents and non-documents (commercial parcels, excluding freight). Growing business requirement for time bound reliable delivery has fuelled the growth of the industry and many new companies have entered into business to harness the emerging opportunities.

The industry has sustained the growth during subsequent period. Opening up of Indian economy coupled with integration of international trade and business requirement for focusing on core competence have opened up new vistas of opportunity for express companies as express service providers in finance and service segment and 3rd party logistics service providers. The express market in India can be characterized by the existence of organised, semi organised and unorganised players.

There are over 2,000 courier companies operating in India. About 20 companies are in the organised sector, 25 in semi-organised sector and others in unorganised sector.

Organised Sector: These service providers operate in domestic and international markets. This sector also includes service providers in international niche markets.

Semi-organised Sector: Operate by and large in the domestic sectors, and has a reach within limited geographical area. This also includes operators catering to centre-specific niche markets (inter-city).

Unorganised Sector: Operate in local (intra-city) markets.

The organised sector dominates the express industry in India, accounting for 60% of the market in terms of revenues. The semi-organised sector accounts for 30% of the express industry market size. The share of EMS Speed Post is estimated at about 10% in FY’ 2003.

The present market is estimated at Rs. 2,493 crore. The domestic market constitutes to about 59%, valued at Rs.1,468 crore. The international market constitute of 41% of the total industry, valued at Rs. 1,025 crore.

In the past, people had to depend on government's postal service and transportationservice for moving their freight. The delivery took lot of time and people had to go tothe post office, railway, or shipyard to receive or trace their packages. Some privateindividuals operated their own vehicles to offer speed and convenience to customers.People who had to deliver packages urgently handed them directly to airlines to becarried as cargo on passenger airlines. Passenger planes traveled to limited


destinations, which limited their scope. Fredrick Smith, an entrepreneur identified theopportunity and established Federal Express (FedEx) in 1973. Smith operated flightsexclusively for cargo and offered home delivery and pick-up services. The businessmodel was a big hit and there was no looking back for the company. Many othercompanies imitated the model with their own fleet and value-added services, and ledto the growth of courier industry. In this chapter, we will discuss the characteristics ofcourier industry, marketing segmentation, marketing strategy, marketing mix, recenttrends in global courier industry and Indian courier industry.

The major domestic and international service providers are:

Airborne Express (I) Pvt. Ltd.

AFL Pvt. Ltd.

Aramex India Pvt. Ltd.

Add Quality Solutions

Blue Dart Express Ltd.

Continental Air Express Pvt. Ltd.

DHL Worldwide Express (I) P. Ltd.

DTDC Worldwide Express Ltd.

Esquire Express (I) Pvt. Ltd.

Expressit Logistics Worldwide Ltd.

Federal Express Corporation

First Flight Couriers Ltd

GR International Couriers

Grand Slam Express Pvt. Ltd.

ICC Worldwide

Jeena & Company

Network Express Service Pvt. Ltd.

Overnite Express Ltd.

Overseas Courier Service

Prakash Air Freight Pvt. Ltd.

Skynet Worldwide Express Pvt. Ltd.

Skypack Service Specialists Ltd.

Suntika Couriers Pvt. Ltd.

TNT India Pvt. Ltd.

UPS Jetair Express Pvt. Ltd.

Recent trends in courier industry

Courier industry is undergoing drastic changes because of the changes in economyand advances in information technology. Let us discuss some of the recent trends inthe courier industry and their drivers:

TechnologyAdvances in technology have transformed the way courier companies operate. Courier companies are able to offer value added services to customers with the help of technology. Apart from ensuring a faster and safer delivery of shipments, they are able to conduct transactions and other business processes electronically. By doing so, courier companies arc able to cut time and costs. They can also avoid the need to hire hundreds of additional employees by using IT intelligently.

Some advanced information systems used by courier companies include COSMOS (Customer Operations Service Master Online System), DADS (Digitally Assisted Dispatch System) and ASTRA (Automated Sorting Tracking Routing Aid System). FedEx uses COSMOS to track packages from the place of pick-up to destination. ASTRA is used to provide accurate and reliable package delivery information to customers. DADS allows couriers to determine the right


route they should use to minimize the time taken for delivery. Software companies are coming up with more solutions for courier companies to serve customers effectively. Some global courier companies in fact have their own IT department to find innovative solutions for their problems.

GlobalizationWith most countries opening up their economy, courier industry is one industry that has gained immensely. In courier industry, about 90% of the costs are fixed costs. As the volume of business goes up the revenues earned, directly contribute to the bottom-line of companies. Hence, courier companies can earn huge profits by expanding their business globally. They can get into strategic tie-ups with local companies in different countries to expand the network. This results in marginal or no increase in costs, but good returns. Some of the companies that have global operations are FedEx, UPS, DHL and TNT. DHL, which started with a small temporary office in the US, gradually rose to the level of national player and then to international player.

In India, courier companies have limited their expansion to countries like Bangladesh, Bhutan and Nepal. Very few players compete with the existing global giants in courier industry. Most large players operate through strategic alliances or joint ventures to limit their investment costs. For example, Blue Dart has a tie-up with DHL and Elbee has a tie-up with TNT. Hence, the global courier industry is consolidated with a few companies dominating the industry. Global courier companies offer not only the core services of moving freight from one place to another, but also higher-end services like logistics solutions for corporate customers. Many corporate firms, which have recognized the potential of these companies, have outsourced their supply chain management operations to them. However, some countries try to protect their courier industry from global competition. For example, South African government prevents foreign players from operating in the under-1kg letter and parcel market


AUTOMOBILE SERVICES

Introduction

With increasing sophistication in transportation, automobile servicing is emerging as an important service-generating sector of the economy. A number of skilled, semi-skilled and manual workers are found getting employment opportunities. Automobile manufacturers and dealerships offer after-sales service and therefore one category of service centers in sponsored by the concerned company. The development processes here are systematic and these service centers develop as a formal sector. On the other hand, there is a second category that has developed independently and in an unorganized way – which could be termed as the informal sector.

Automobile Services: Concept

At the outset, we go through the conceptual aspect of marketing the automobile services. We find automobile services marketing a managerial process that makes possible an organised development of the servicing centres It is to help the servicing centres marketing processes so that they succeed in generating profits and at the same time also ensure quality services to the users at large.

The marketing of automobile services focuses our attention on the development of optimal inputs for making possible cost-effectiveness which help them in making the price structure competitive. We can't deny the fact that the market is competitive since a number of servicing centres are found operational, especially in the big towns and cities.

We find marketing a customer-satisfaction-engineering and therefore the marketing process helps the servicing centres in identifying the needs and requirements of the users and making the necessary arrangements accordingly which help them in increasing the market share and establishing the leadership in the command area. The marketing is also known as a social process since the servicing centres are required to make environment-friendly arrangements so that intensity of environment pollution due to the smoke generated by the centres is countered in an effective way. Further, it is also to minimise the problem of traffic congestion because the servicing centres are required to focus on the location points vis-à-vis the aesthetic management. In view of the above, we observe the following points regarding the concept of marketing automobile services.

It is a managerial process that makes possible a planned development of the servicing centres.

It is a customer-satisfaction-engineering that helps in identifying the level of expectations of users and to fulfill them to satisfy.

It is a social process that helps in countering pollution of environment and traffic congestion. In addition, it is also to create job opportunities to skilled, semi-skilled and manual workers.

Rationale Behind Automobile Services Marketing

The marketing experts feel that both the formal and informal sectors, organised and unorganised sectors, small and big organisations need to practise marketing since this helps all the concerned in many ways. If the servicing centres are started, the main thing influencing the organisers is the profitable market potentials. If they practise marketing, the opportunities are to be capitalised on optimally. The following facts testify the implementation of modern marketing principles in the automobile services.

1. To improve the quality of services: It is right to mention that the application of marketing principles makes the ways for qualitative improvement: in the service mix of the automobile servicing centres. Generally they are found offering repairing, denting, painting, cleaning services. In this context it is pertinent that they take care of quality of workers of different categories they employ. In addition, they also need to assign due weightage to the tool management and the materials used for the different types of services,. They need to formulate a service mix that helps users in getting the integrated or centralised services. The marketing


makes an advocacy in favour of a package that includes integrated services. We can't deny the fact that the application of marketing principles would help them in improving the quality of services.

2. Satisfaction to the users: We are well aware of the fact that different categories of users avail the services and the marketing professionals need to identify the changing level of expectations of users. It is right to mention that th -process of technological sophistication has also influenced the management of servicing. Of late we find the use of computers for painting and even for denting. The cleaning services are found automated. The repairing services also need a number of expensive tools and technologies. The servicing centres need to satisfy the users and this is possible when they make available quality services. In some of the servicing centres, we find more efficient skilled employees whereas in a majority of the centres we find employees below the level of efficiency. The marketing practices make it essential that the different categories of workers engaged in the process of offering the services behave decently with the users. They are supposed to employ only those employees who have a high level of efficiency and behavioural profile. These arrangements simplify the task of satisfying the users.

3. Increasing the market share: The application of marketing principles also helps the servicing centres in increasing the market share. It is natural that in the big towns and cities, a number of servicing centres are found operational. The centres offering quality services, behaving decently with the users and charging a reasonable price for their services succeed in increasing their business which make it easier to increase the market share. With the increasing pace of industrialisation, we find a basic change in our life-styles and therefore, we find the emergence of a profitable market. If you offer quality services, the marker share would considerably be increased.

4. Maximising profitability: The most important thing in marketing the services of automobile centres is to pave avenues for generating profits. We accept the fact that if they keep on moving the process of offering the quality services, the avenues for generating profits would sizeably be broadened. For maximising the rate of profitability, it is essential that the servicing centres make possible cost economy by regulating the unproductive expenses. Thus the automobile servicing centres find it convenient to make profits which help them in recycling the process of development and expansion. We don't favour generation of profits by using poor quality of materials or by misleading the users. 5. A Planned development: Of late in almost all the towns and cities we find a mushroom growth of automobile centres. Such a haphazard and unplanned development is found creating numerous social and environmental problems. The unplanned location of automobile servicing centres in the cities precincts invites a number of problems, such as pollution of environment, traffic congestion or so. In addition, we also find the servicing centres ill informed about the changes in the technologies of new generation of automobiles resulting from which the staff can't be made available the required training facilities which may affect their business.

The aforesaid facts make it clear that application of marketing principles is justified because the servicing centres, society, users are benefited in many ways. It is not essential that only the big servicing centres think in this direction. In a true sense, we find its instrumentality even for the small servicing centres.

Marketing Mix

While formulating the marketing mix, the automobile servicing centers need to go through different submixes.

Product Mix:

The product mix of automobile serving would include:

Repair and replacement of sparesMaintenance checkups – oil change etc.Warranty checkups


Washing and cleaning servicesAir filling, checking, tubes repair and replacementAccident repairs – dentingPaintingTyre alignment and balancingGreasingModification servicesHeating and Air-conditioning systemElectronics and electrical maintenanceBattery MaintenancePollution controlTruck/Bus Body building servicesTeflon Coating

Classification of Automobile service stations

Depending on vehicle type: Two-wheelers Three-wheelers Four wheelers (Cars, vans, jeeps etc) Commercial vehicles (Trucks, buses mini-trucks etc.)

Depending on authorisation: Service centers run by dealerships Authorised service centers (Franchisees) Roadside Garages/mechanics Express Service Centers: These help many stranded vehicles on the highways by sending

across their repair man to the vehicle

Depending on exclusivity Centres meant only for one brand of vehicles Centres that take up a wide range of brands Centres that service only one kind of vehicle (e.g. Only two-wheelers) Centres that service more than one kind of vehicles

Depending on function: Washing and cleaning services Maintenance services Repairs/Garages Accident repairs/Denting Paint Shops Tyres – alignment and balancing services Tyres – repair and puncture shops Air conditioning maintenance PUC centers Car washing – home service

PriceWith the core product – sales of vehicles getting extremely competitive, most dealers and manufacturers have decided to go to the “servicing” route, thus opening up avenues for profits. However, automobile servicing remains a highly price sensitive sector. Most of the vehicle owners prefer to get their free servicing done during the warranty period at authorized service centers. But once the free servicing period is over, they abandon the authorized service centers and shift to roadside mechanics or independent garages. Only about 15% of vehicle owners prefer to get their vehicles serviced at authorized centers post the free period, due to high pricing.

The authorized service centers are, naturally priced higher, due to the wide variety of services and conveniences offered at their centers. Authorised service centers (ASC) deal in volumes and their charges are significantly higher than roadside garages. Moreover, it is the high cost of spares that deter customers at these centers. ASCs use original spares that are exorbitantly priced.


The same spares, available in the open market are relatively a lot cheaper. Garages, on the other hand, use these spares and save costs for the customer.

However, competition between ASCs themselves are hotting up. In bigger cities, a single manufacturer has a number of ASCs. For example, Tata Motors has three ASCs in Nagpur. Though pricing is fixed for a number of routine jobs, they are under severe pressure from roadside garages to cut down on labour costs.

Place

Place plays a prominent role in the automobile servicing industry. Service centers run by dealerships are usually high-tech units with state-of-the-art infrastructure. They are automated to a fair degree. Customers prefer to take their vehicles closest to their homes and service, so companies prefer to appoint ASCs in various parts of cities. Maruti is one of the companies in India which has unparalleled service network. To ensure the vehicles sold by them are serviced properly Maruti had 1545 listed Authorized service stations and 30 Express Service Stations on 30 highways across India. Other automobile companies have not been able to match this benchmark set by Maruti. In fact, it is the vast network built by Maruti that has been helping it to maintain a stranglehold on the market share. People in smaller towns and villages prefer to buy vehicles that can be serviced easily.

On the other hand, the unorganized sector works through garages or shops on the roadside. These, though not as well equipped as ASCs, charge less and offer flexibility to the customer. These units may even outsource certain tasks to other units – for example tasks like washing or welding may be done at other shops.

Promotion

Promotion forms an important part of automobile servicing – mainly due to increasing competition. Roadside garages do little promotional activity. Their promotion is mostly based on word-of-mouth publicity from existing customers. Their activity is based a lot on accessibility and nearness to the customer.

Advertising: Advertising, though low key, is still an important part for ASCs. Most advertising is done by manufacturers themselves, with the franchisees sharing costs. In case of Bajaj Auto, advertising is handled locally by individual dealers, but the costs are compensated in part by the parent company. ASCs also use the Cable TV route as it is a lot more cost effective for them.

Direct Marketing: A few companies have adopted the direct marketing route too. Marketing personnel scout for vehicle owners and talk to them offering special membership schemes or discounts.

Extended warranty: Dealerships offer an extended warranty scheme at a the time of purchase so that they are guaranteed that vehicles return to the service centers for an extended period of time beyond the usual warranty period.

Organizing special camps: Most ASCs organize “free” camps like monsoon checkup etc. so that customers can avail thee benefits.

Brochures and leaflets: ASCs from time to time can distribute leaflets and promotional material to potential customers.

Membership clubs: Most manufacturers offer club memberships – so that they build in loyalty from their existing customers. In case of the Hero Honda Passport programme, members are offered points on every rupee spent on service centers. These points in turn offer them a number of privileges like discounts on spares and service, accident insurance etc.

Promotional events: Many dealers organize events like musical night, cultural programmes etc. and offer their customers free passes. Tata Motors for instance organizes cultural programmes, where entertainment is mixed with information on their products. The Hero Honda passport programme too offers such benefits.


Use of stickers: As a reminder tool, almost all garages and ASCs use bumper stickers once the vehicles are serviced. This helps immensely in brand retention. A few ASCs also put in stickers with their help line numbers so that customers can call them if they are stranded on the road.

Telemarketing: As telephone numbers are already on records of dealers, they use them to call up vehicle owners explaining their services and special offers.

SMS reminders: ASCs keep sending their customers timely reminders through SMS on their cell phones, letting them know that time is due to get their vehicles serviced.

PeopleIn the automobile service sector, service personnel interact with customers. The business is mostly based on trust and the quality of service received. Thus people form an important part of the business.

In case of roadside garages, the chief mechanic, usually the owner interacts with the customers. This relationship is usually built on trust so that he gets repeat customers. The quality of work here depends on the skills of his mechanic staff.

With ASCs, the organisation is a lot more structured. An ASC is usually headed by a General Manager, who overlooks the operations of the unit. They are staffed with reception personnel who help customers with their doubts. A service engineer, is the one who interacts with customers, understanding and explaining technical aspects to the customers. He is the one, who prepares the job cards, provides cost estimates and overlooks the servicing of the vehicle.

The auto-mechanics, who usually do not interact with the customers, are the ones who actually work on the servicing of the vehicles. These people are specially trained by parent companies about various technicalities. Their performance ultimately decides the quality of service received by the customer.

Process

The process in the automobile service industry varies from the informal to a completely structured one.

While roadside garages would have an informal procedure where the mechanics note down complaints and tasks to be done and provide cost estimates. They would then perform the tasks, do a quality check and hand over the vehicles.

With ASCs, there is a formalised procedure to handle servicing. A typical process would be something like the below:

The customer arrives at the ASC with his vehicle. A Service engineer inspects the vehicle, and prepares a job card. The job card would

include details like free or paid servicing, tasks to be done, complaints etc. The service engineer will explain technicalities to the customer and provide him a cost estimate.

The job card will also include details like existing fuel level in the vehicle, mileage, and accessories fitted (Car stereos etc.)

The service engineer also provides a time when the vehicle will be ready for delivery. The vehicle now moves into the workshop where under the supervision of the service

engineer, mechanics handle the servicing and repair procedures. A list of spares used is prepared and replaced parts are returned to the customer Once the servicing is complete, the service engineer inspects the complete list of work

done and also takes a test drive. Once satisfied, the service engineer approves the tasks performed and prepares a bill for

the entire service. The customer is then given “work performed” list on the car along with the bill. The customer is also asked to fill up a feedback form so that the quality of service can be

gauged.


Once the customer pays the bill, he is given a “gate pass” so that he can drive out the vehicle from the ASC premises.

Automobile services marketing in Indian Perspective

The automobile servicing business in India undergoing a transformation. Steps towards creation of national chain of organized workshops are underway that is likely to change the nature of the vehicle servicing market. Most of the changes in the Indian market is attributed to the economic liberalization and opening up of the automotive market. Moreover, the vehicle servicing market is no different to this trend. The changes are taking root now and setting the trend for the future.

Prior to the entry of global automobile manufacturers, the Indian automobile market was dominated by home grown companies like Hindustan Motors (HM), Premier Automobiles Limited (PAL) and the people's car manufacturer Maruti Udyog Limited (MUL) for passenger cars and Ashok Leyland and Tata Engineering in the commercial vehicle segment. Bajaj Auto, Hero Honda, Escorts Yamaha, TVS Suzuki, and LML were the companies active in the scooter and motorcycle market.

The servicing needs of these vehicles were undertaken mostly by roadside mechanics and a few organized workshops. MUL set up a huge chain of authorized service centers covering the entire country to service its vehicles. However, as the competition in the new car market intensified and profits margins were squeezed MUL viewed servicing as a money-spinner for the entire operation.

The vehicle servicing market is highly unorganized. The participants in the vehicle servicing market are new vehicle dealer's workshops, authorized service centers of vehicle manufacturers, some organized service centers, and roadside mechanics. Vehicle servicing habits differ based on the socio-economic profile of each individual customer. Commercial vehicle owners are highly price sensitive and extensively use roadside mechanics for servicing needs. The number of organized service centers also remains low along national highways and the hinterland. This has lead to the creation of the unorganized segment to fill the gap with quick, flexible and lower priced servicing.

Two-wheeler owners historically have used roadside mechanics for servicing as manufacturers of these vehicles focused on their core business, which are vehicle sales. As the market turned competitive, vehicle manufacturers used servicing infrastructure and cost of service as a key differentiator in their overall sales strategy. Currently only 10-15 percent of two wheelers return to the authorized service center for their servicing needs post warranty. It is fair to mention that roadside mechanics are the dominant competitor in the market for vehicle servicing.

Vehicles introduced by new entrants like GM, Ford, Hyundai, Honda, Toyota and Volvo were serviced exclusively through the company service centers. This was the first step towards organizing the servicing market. The absence of a national chain of service centers was the missing piece and the entry of TVS Xpress and Cummins Suraksha fills the gap in the market place.

Vehicle owners have had two options - one is to use the authorized service centers (ASC's) of vehicle manufacturers or the roadside mechanics for their repairs. ASC's offered customers standardized service at costs predetermined by vehicle manufacturers that ensured transparent operations. ASC's were equipped with a good infrastructure like customer waiting areas, well lit work shops, trained mechanics, proper tools and equipment needed to perform repairs, genuine parts and transparent billing. ASC's fulfilled all customer needs except that all this came at a price. The huge premium charged by vehicle manufactures for their genuine parts and the cost of labor meant that customer had to settle for a higher bill.

On the other hand, the roadside mechanic used spare parts openly available in the aftermarket that was cheaper compared to genuine spare parts. Most component manufacturers that supplied to vehicle manufacturers for their aftermarket operations sold the same component in the aftermarket. Availability of quality spare parts was not an issue. The roadside mechanics charged a lower labor rate for repairs and servicing and provided flexible delivery options. The


relationship between the mechanic and the customer was based on trust. The problem with roadside mechanics was the lack of transparency in operations as customers were short charged in components used. Roadside mechanics often interchange components from one vehicle to another and also use alternate brands but charge the customer for original equipment quality brands.

The structure of the market created a gap in terms of customer's needs and expectations and the current fulfillment of these needs. Companies like TVS Xpress, Cummins have positioned themselves to fulfill these unmet needs, - quality service using genuine, and OE quality spare parts at an affordable price. Need less to say, TVS and Cummins are the some of the best-known brands in India.

The factors that are driving this transformation are increasing vehicle population, dominance of the unorganized segment and the ever-increasing gap between customer expectation and fulfillment. TVS Xpress was the first company to enter the car servicing market. Currently, the roll out has covered three states with a total of 55 service centers. Companies like MICO-Bosch and ACDelco have entered this market sensing good opportunity. TVS and MICO have a large aftermarket operation in India and vehicle-servicing business is a logical extension to their business model. TVS group companies also operate dealership for FIAT and Honda and bring in years of experience in automotive aftermarket distribution, component manufacturing, and servicing.

Cummins has created a chain of five service centers spread across the country to provide repair and service for truck operators. The aim of Cummins is to provide one stop solution to the needs of truck operators. The plan is to increase the numbers of service centers to about 50 in a few years time to cover all the transit points along national highways.

The two-wheeler market that has seen an explosive rise in sales over the last few years also has its share of market consolidation. Castrol, a company well known for its lubricants, has entered into the motorcycle servicing business with the roll out of its first workshop 'Castrol PrimaZona' this year. In the future, Castrol expects to have a presence all over India.

Is the market rosy for these companies? There are issues that these companies face that can be attributed to growth pains. By following a gradual roll out process, these companies are learning from experience. Vehicle manufacturers' policies can also affect this market. Longer warranty on vehicles will restrict the potential market available. Vehicle manufacturers could also restrict the supply of components to the aftermarket thereby preempting the entry of competitors.

The Shape Of Things To ComeThe servicing market in India will have to consolidate and organize. The national chain of service centers provides good quality service at an affordable price. As average vehicle age increases, vehicle manufacturers will find it hard to retain customers at their ASC's. Organized workshops can provide the required service level at lower costs. A collaborative effort between vehicle manufacturers and organized chains may be required as this may lead to reduced usage of spurious and counterfeit components leading to mutual gains. The success of these chains is sure to attract new entrants in this market.


SAMPLE QUESTION PAPERS

1. Define Marketing Mix. Evaluate Marketing Mix strategies adopted by Speed Post.

2. What is meant by the term consumer orientation? Which social and demographic trends have led to the development of new services?

3. State the feature of Marketing Services? Distinguish between goods and services.

4. Describe Mutual Fund as a product. Formulate marketing mix strategy for a mutual fund.

5. Explain the concept of bank marketing. Justify marketing of banking services.

6. What is the Insurance Product? Discuss Insurance Product Planning and Development?

7. What is market Segmentation? Evaluate market segmentation variables that can be used for segmenting tourism market.

8. Discuss the marketing strategies adopted by specialty hospitals in India.

9. Evaluate product mix strategies employed by telecom companies in India.

10. Write short notes on any two:a. Importance of marketing servicesb. Marketing of Higher Educationc. Importance of Promotion Mix for servicesd. Market Segmentation in Services

1. What do you mean by the concept 'Service Marketing"? Describe its salient features and significance.

2. Explain the concept of 'Bank Marketing'. Justify the marketing of Banking Services.

3. What is Insurance Marketing ? Discuss in detail the foundation of Marketing Mix for Insurance Marketing.

4. Elaborate the concept of Mutual Fund Marketing. Explain the prospects in 'the career as a mutual fund advisor'.

5. Discuss Product Planning and Development in Tourism Marketing indicating its importance.

6. Discuss the concept, importance and necessity of Innovative Education. Explain the challenges faced by Indian Educational Institutions.

7. Explain the term Marketing Medicare. Examine the thrust areas for Medicare Services.

8. Explain the conceptual framework of Telecommunication Services. Discuss the rationale behind Telecommunication Marketing.

9. Describe the concept and importance of Courier Services Marketing in India.

10. Write notes on (any two) :—(a) Building Services Aspiration.(b) Career as an Insurance Agent.(c) Marketing Mix for Adult Education.(d) Conceptual Framework of Automobile Services Marketing.


Service Sector Management-Nkumar-2010 - Copy

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