Explanation : Price is a key positioning factor and must be decided in relation to the target market, the mix of products and services, and the competition. All retailers would like to achieve both high volumes and high gross
margins, but the two don’t usually go together. Most retailers fall into the high markup, lower-volume group (fine speciality stores) or the low-markup, higher-volume group (mass merchandisers and discount
retailers). Some retailers offer everyday low pricing (EDLP) while others use high-low sale pricing; EDLP can be more profitable for supermarkets in certain situations. “Breakthrough Marketing: Target” describes how Target hits the retail sweet spot with low prices and differentiated products.
Explanation : Services have four major characteristics that greatly affect the design of marketing program s: intangibility, inseparability, variability, and perisbability.
Intangibility: Unlike physical products, services cannot be seen, tasted, felt, heard, or smelled before they are bought. The person
getting cosmetic surgery cannot see the results before the purchase, just as the patient in the psychiatrist’s office cannot know the exact
ou tcom e of the treatm ent. To redu ce uncertainty, buyers will look for signs or evidence of the service quality, drawing inferences from the place, people, equipment, communication material, symbols, and price they see. Therefore, the service provider’s task is to “m anage the evidence,” to “tangibilize the intangible.
” Service firms can try to demonstrate their service quality through physical evidence and presentation. A hotel will develop a look
and a style of dealing with customers that realizes its inten ded custom er value proposition, whether it’s cleanliness, speed, or some other benefit. Service marketers must be able to transform intangible services into co ncrete b enefits and a well-d efin ed experience. The Disney Company is a master at tangibilizing the intangible and creating magical fantasies in its theme parks, for instance.
Inseparability: Services are typ ically produced and consumed simultaneously, unlike physical goods, which are manufactured,
put into inventory, distributed through resellers, and consumed later. If a person renders the service, then the provider is part of the service. Because the client is also present as the service is produced, provider-client interaction is a special feature of services marketing. Often, buyers of services have strong provider preferences. Several strategies exist for getting around this limitation. One is higher pricing in line with the provider’s limited time. Another is having the provider work with larger groups or work faster. A third alternative is to train more service providers and build up client confidence, as the worldwide tax preparation company H&R Block has done with its national network of
trained tax consultants.
Variability: Because the quality depends on who provides the services, when and where they are provided, and to whom, services are highly variable. In general, service firms can take three steps toward quality control. The first is recruiting the right employees and
providing them with proper training. The second is stan dard izin g th e serviceperform ance pro cess through out the
organization. A service blueprint can map out the service process, the points of customer contact, and the evidence of service from the
customer’s point of view. This supports a “zero defects” culture and is helpful both in developing new services and in planning for
The third step is monitoring custom er satisfaction through suggestion and complaint systems, customer surveys and comparison shopping. General Electric sends out 700,000 response cards yearly, asking households to rate its service people’s performance. Firms can also develop customer information databases and system s to permit more personalized service, especially online. Finally, some firms offer service guarantees to reduce consumer perceptions of risk. Perishability: Services cannot be stored, so their perishabiltiy is a problem when demand
fluctuates. For example, public-transportation co m pan ies have to own m uch m o re equipment because of higher rush-hour
demand than if demand were even throughout the day. Service providers can deal with perishability in a number of ways.