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Growth of Service Sector Economy
As India moves increasingly toward a services economy, marketers need to know more about
marketing service products.
On a simplistic note, one can say that services are activities or benefits that one party can offer
to another that are essentially intangible and do not result in the ownership of anything. Thus
we see how services are different from goods.
During the past decade services have increasingly assumed an important role in the Indian
economy. Ever since this trend was set in the nineties, services have gained dominance. The
competition, simultaneously, in service organisations, is becoming intense and severe.
As a result these organisations have to have a more professional approach to managing their
businesses. Perhaps it is in this context that the role of marketing is gaining importance in
service organisations.
Defining Services
 Kotler and Bloom, in 1984, defined services as any activity or benefit that
one party can offer to another that is essentially intangible and does not
result in the ownership of anything. Its production may or may not be tied
to a physical product.
 According to Gronross, a service is an activity or series of activities of more
or less intangible nature that normally, not necessarily, take place in
interactions between the customer and service employees and/or physical
resources or goods and/or system of the service provider, which are
provided as solution to customer problems.
Understanding Service
Characteristics
 As our knowledge of the characteristics of services grows, so does our ability to deal
with them from both an economic and marketing perspective. Services are intangible,
inseparable, variable, and perishable. Each characteristic poses problems and requires
strategies to deal with those problems
Characteristics of Services
 Intangibility means that unlike goods, services cant be seen, touched and felt, tasted or
smelled or even heard before they are purchased.
 Inseparability suggests that services are produced, distributed, and consumed
simultaneously. In the case of manufactured goods, production takes place in the
production unit; thereafter the goods are kept in inventory and transported to the
distribution outlet from where the consumers pick them up for consumption.
 Heterogeneity means that services delivered generally vary in quality, time consumed in
delivery, and the extent of service provided. Since people deliver most services, they are
variable.
 Perishibility means that services cant be stored
Example: For Airlines, in a particular flight, vacant seats remain unsold, whereas in the case of
manufactured goods, unsold items can be put into inventory and can be sold the next day
More Intangible than Tangible
A good is an object, a device, a thing.
A service is a deed, a performance, an effort. When a good is purchased, something tangible is acquired;
something that can be seen, touched, perhaps smelled or worn.
When a service is purchased, there is generally nothing tangible to show for it. Services are consumed but
not possessed, therefore the absence of tangible features means that it is difficult for the seller to
demonstrate or display services and for buyers to sample, test, or make a thorough evaluation.
To reduce uncertainty, buyers look for signs or evidence of service quality. Therefore, the service provider’s
task, according to Levitt, is to “manage the evidence” and to “tangibalise the intangible”.
Shostack even summarised that most market offerings are a combination of tangible and intangible
elements. It is whether the essence of what is being bought is tangible or intangible that determines its
classification as a good or a service.
Less Standardised and Uniform
 It is argued that it is often impossible to assure consistency in the services provided by a seller or to
standardise offerings among sellers of the same service, while it is possible to offer consistency and
uniformity of products.
 Levitt argues that such a distinction has limited value because it is a production oriented approach as even an
identical generic product will be differentiated when it is viewed as offered product for sale. Thus, while the
core product may be uniform, the process will always be differentiated. Secondly, Levitt argues that owing to
the industrialisation of services, their production can no longer be viewed as being heterogeneous.
 Attempts have been made to improve productivity in the service sector by the introduction of technology.
Uniformity can be achieved by substituting equipment and machinery for labour.
 Hostage suggested that service firms could also reduce variability by training the service providers in
appropriate responses to each customer situation. They can also monitor customer satisfaction through
suggestion and compliant system so that poor service can be detected and corrected.
Simultaneous Production and
Consumption
 Services are typically produced and consumed at the same time. The
relationship between production and consumption therefore dictates that
production and marketing are highly integrated processes. Example: The
telephone company produces telephone service while the telephone user
consumes it.
 Generally, goods are produced, then sold, and then consumed. Services, on the
other hand, are usually sold first, then produced and consumed
simultaneously.
 The service provider and the client are often physically present when
consumption takes place. Sasser observed that the firm is unable to store or
transport services that only direct distribution is possible, thereby potentially
limiting the number of markets the firm can cover. Apart from the stress laid
on right place and right time in case of distributing goods, there is additional
importance given to the performance of service in the right way as well
Perishability
 Kurtz and Boone observed that the utility of most services is short-lived;
therefore they cannot be produced ahead of time and stored for periods of
peak demand. The perishability of services is not a problem when demand is
steady because it is easy to staff for the services in advance.
 When there are wide fluctuations in demand there should be a highly flexible
production system or idle productive capacity. Sasser has described several
strategies for producing a better match between demand and supply in a
service business. On the demand side, the firm can make use of differential
pricing, cultivating non-peak demand and developing complementary
services.
 On the supply side, for effective matching with demand, the firm may hire
part-time employees to serve peak demand; peaktime efficiency routines can
be introduced, facilities for future expansion can be developed, and increased
consumer participation can be encouraged.
Difference between Goods and
Services
Product vs Services
 Levitt has suggested, ìThere are no such things as service industries.
There are only service industries whose service components are greater
or less than those of other industries. Everybody is in service. The point
that Levitt was trying to put across is that with almost every tangible core
physical product, an intangible service component is associated.
Therefore, everybody is in service.
Ms G Lynn Shostack, the Vice- President of Citibank, suggested that marketing entities are
combinations of intangible and tangible elements that are distinct and
discrete. If these absolute tangible and intangible elements are taken to the two ends of a
continuum, we can observe that all goods and services dont fall at one place. There is a range
that varies from absolute tangible goods like salt to an absolute intangible service like
education
 Theodore Levitt proposed the other approach of distinction between various
goods. According to him, goods can be put into two categories, namely,
search goods and experienced goods. Search goods are generally those
which are packaged goods and the customer can see, evaluate and try them
prior to purchase.
 Example: Car, shampoo, etc. Experience goods, on the other hand, are those
which one can see or evaluate after purchase. Example: Holidays, teaching, etc
 Some persons call search goods as tangible goods and the others as
intangibles. There is a range between the two extremes and there could be
certain products falling in this range, as explained in Figure 1
Contribution of Service Sector to the
Economy
 Within a short span of 50 years since independence, the contribution of the service
sector in India to the country’s GDP is a lion’s share of over 60%. However, it still
employs only 25% of the labour force.
 IT-BPM/ Fintech
 The IT/ITeS & Fintech segments provide over $ 155 bn in gross value add and have the
potential to grow between 10 -15% p.a. Exports form its largest component. So far, our
key advantage has been low - cost labour arbitrage in a predominantly English -
speaking country. Going forward, the IT and ITeS segments require significant upskilling
to move beyond a ‘low - cost low value add service provider’ to a ‘high value add
partner’.
 Indian IT companies can also leverage their skill sets to provide fintech solutions to
global financial customers. Financial risk management services, insurance, natural
disaster modelling and underwriting are examples of high value add services performed
within India for a global audience.
 Healthcare & Tourism
 The current contribution of the healthcare industry is over $ 110 bn and is
expected to touch $ 280 bn by 2020. Availability of world - class medical
facilities, skilled doctors, technicians and pharmaceuticals are some of our
advantages. With digital communication and interfaces, diagnostic
medicine can also be tapped into as a service for global customers.
 Similarly, for tourism, India is renowned for its places of natural beauty and
historical significance. Tourism presently contributes $ 47 bn to the
country’s GD, compared with $ 115 bn for China. Thus, tourism has
exponential possibilities to boost the Indian services sector in the next
decade.
 Space
 India captured the world's attention last February when it broke the record
for launching the most number of satellites into space. Moreover, this was
done at a fraction of the cost incurred by other space powers.
Indian services in the space domain, with proven expertise in multiple
launch technologies, provide it with a significant advantage over its peers
in the global space transportation industry. Our launch capabilities have a
near 100% track record. Many countries are actively looking to piggyback
on India’s launch facilities. This demonstrates great potential. The
government is actively proving its ability, but more can be done to build
capacity in military and non - military space applications. In this context,
public - private participation is key to ensure the flow of capital, as well as
to strengthen competencies in this area.
 Logistics & Transportation
 India’s natural coastline and vast river network give it a competitive edge in
providing transportation and logistics services, both domestically and
internationally. These can be classified into ports and ports services,
warehousing, trans - shipment services, e - logistics, inland waterways for
freight and passengers, expressways and dedicated freight corridors. India’s
logistics service sector itself is expected to grow from $ 115 bn to $ 360 bn by
2032.
 Other services
 Media & Entertainment (animation, gaming, dubbing), Education (online
platforms such as MOOC), and Sports (IPL, IFL, Sports Management), Legal/
Paralegal services, Risk management and advisory functions, etc. are areas
that can lead to an immense contribution of service industry in the Indian
econom
The Service Triangle Management Model
 There is a revolution taking place in the service industry, necessitating a radical change in every service professionalís
perspective. Two models typify the change in the service perspective today:
 The Industrial Management Model: This is prevalent today and is a hangover from the industrial era.
 Firms that follow this model fully believe that the factors that bring in the revenue are advertising, sales promotion, accessibility,
distribution and locational advantages. They are of the opinion that the cost drivers are personnel, operations and that these should
be controlled. Even service sectors that seek price-competitive advantages follow this method
 Example: Jewellers of Mumbai employing Bengali goldsmith. the myriad call centres that are sprouting all over India today. To get
clients and projects, they are pursuing cost-cutting measures as the means to control expenses
 The Market-focused Management Model: This is the model which can be used by service firms as a replacement to
meet the new environment changes for survival.
 The Market-focused Management Model focuses on the components of the firm that facilitate the firmís service delivery system. It
proposes that the firm should be supportive of those personnel who serve the customers and interact with them. In other words, there
is more emphasis by the organisation on those employees who are in the front line. The support is in the form of equipment, office
space (hygiene factors), moral support, motivation initiatives, career growth and money
The Service Triangle
 The Service Triangle framework depicts the relationships among three
groups of the service organisation:
 The service strategy,
 Systems embedded in the organisation and
 The people of the organisation. The customer is at the centre,
interacting with each of the group
 The framework has the following six relationships:
 The service firmís strategy must be communicated to its consumers: This would not only
apprise the consumer about the firmís service product and its distinguishing features
but also about its commitment for delivery.
 . The service strategy also needs to be communicated to the firms employees: This
would ensure transparency, eliminating misunderstandings and aid in sincerity of
commitment percolating down the management levels.
 There should be consistency in the service strategy and the systems that are developed
to run the day-to-day operations to achieve the strategic goal. Systems would be
designed only after the service strategy becomes clear and is agreed on. The systems
would then greatly aid the service transactions/encounter. This would greatly affect the
feeling of the customers, which would lead to their satisfaction
 The impact of organisational systems on customers:
 This would in turn greatly influence their service experience. Example: Continuing with the Thomas
Cook example, if the organisational systems are faulty, like the communication to the inbound tourists
(the itinerary details), or if a Thomas Cook employee is not aware of the latest currency exchange rates
or the hotel tariffs - then the customer is discouraged and leaves with a lasting impression of the
organisation as being inefficient and incompetent.
 The importance of organisational systems and employee efforts: Rules and regulations should aid an
an employee in giving of his best, not hinder him in his service transactions. ìGiving someone the
freedom to take responsibility releases resources that would otherwise remain concealed,î said Jan
Carlzon, the legendary head of Scandinavian Airlines System (SAS). Carlzon was responsible for turning
around SAS. Organisational systems should ìtransform people from administrators (read clerks) to
leaders and facilitators.î The rules and regulations should empower the employee and facilitate him in
intrapreneurship-entrepreneurship inside an organisation.
 . The interaction between the customer and service provider: It is these
interactions that give rise to service encounters or critical incidents. They
are also called Moments of Truth (MOT). The quality of these interactions is
the source of customer satisfaction.
 Example: An insurance company might profess to be very modern, high-
tech and big, and boast of versatile products. But if the quality of
transaction with the customer is not pleasant, the customer will have a
negative perception, which actually is the measurement of the quality of
insurance service by the company.
Service Triangle Marketing Model
 The Company
 This is the organisation that has dreamed up the service product, and its various benefits. It offers
the service product to the customer to achieve its service goals to the customers. Example: East
India Hotels, which owns and manages the Oberoi brand of hotels, offers expensive
accommodation, entertainment, leisure, etc., for the upper crust of society. Autoriders have
collaborated with Avis/Hertz-Rent-A-Car to provide a fleet of cars for rental usage to corporate and
well-heeled individual customers.
 The Customer
 The customer is the one who wants his needs and desires satisfied. He will do so by consuming the
service product. Example: Romesh Bhandari wants a loan to purchase a car. He gets a loan from
ICICI Bank at a certain rate of interest. The Sharma family is bored and therefore goes to Essel World
on a public holiday. They have a grand time.
 The Provider
 They are the internal customers of an organisation who invariably complete the service transaction
on behalf of the company. They are mostly employees, but also include franchisees, channel
partners, distributors, wholesalers, retailers, etc. Example: Andromeda is the largest Direct Sales
Agent (DSA) for Citibank and successfully sells its multibrand cards successfully. Karvy Consultants
and LIC, Reliance, etc. are other examples for this.
 Three different types of marketing take place during the service transaction amongst the
three entities:
 External Marketing: The company does external marketing on the customer. It promises
benefits, explains features and assures satisfaction by way of advertising, public relations
exercises and other forms of corporate communication. It uses mass-media to convey its
promises. It ìmakes promisesî to the customers.
 Internal Marketing: The Company does internal marketing to its providers. The company
has to provide working space like offices, and equipments, like computers, and telephones to
its provider. It also has to recruit, select and trained appropriate employees, channel partners,
and franchisees. It enables the providers to complete the service transaction. The company
ìenables its promisesî.
 Interactive Marketing: The providers do interactive marketing with the customer. The
provider is the one who interacts with the customers. The provider is the face of the company
and represents the company. Both the customer as well and provider get instant feedback
about each other during a service transaction. Their transaction reflects the perception of the
quality of the service. The provider ìkeeps the promisesî made by the Notes company to the
customers
SERVICE MARKETING MIX
 The four traditional Ps of the marketing mix - product, place, price, and promotion are adequate for marketing a product.
 However, they fail to cover the following aspects, which differentiate products from services and are:
 The product element involves only tangible aspects and is therefore not appropriate for services, which are basically intangible in nature.
Example: The strategy used to design and launch a new motorcycle model cannot be adopted for launching a new service as a variant.
 A part of the promotion of services usually takes place at the time of consumption itself. This is not so in the case of a product. In fact, the
people involved in service production handle the promotion too in most cases. Example: The way in which a waiter at a restaurant provides
service to the customers is a form of promotion of the service. However, the promotion element of the traditional marketing mix does not
take this difference into consideration.
 In the Indian scenario, the public sector produced most of the services until very recently (it still produces many services like rail
transport). Very often still, the end consumer pays the standardized and subsidized price, and this aspect is ignored by the price mix.
 The dual role played by service customers as co-producers and end consumers in the production of service goes unnoticed by the four
traditional Ps.
 The four traditional Ps fail to capture the importance of distribution for services. In most of the services, the production and
consumption takes place at the same time; therefore, the distribution channel is either absent or is very small.
 Further, consumers are unable to perceive the quality standards of services before consumption. On the other hand, marketers are not
able to identify and measure the elements of the marketing mix that can deliver quality
 Services have special characteristics like perishibility, intangibility and inseparability, which distinguish
them from goods.
 People, process and physical evidence play a greater role in the marketing of services than in the
marketing of products.
 Product
 Marketers have identified three levels in developing the product element of the marketing mix as far as
services are concerned.
 The core level aims to satisfy the important needs of customer while the tangible level manages the
appearance of the product. The augmented level involves the addition of supplementary services to the
basic offering.
 These three levels can be condensed into two, the core level that caters to the basic benefits and a
secondary level which includes the tangible as well as the augmented service levels. The core level
basically deals with the service offering while the secondary service level deals mostly with the delivery of
service.
 Example: The core service of a restaurant is to serve good food to the customers while the secondary
service includes providing them with a good ambience. It is easy to differentiate products from one
another when compared to services
Pricing
 The pricing of services is very different from the pricing of goods for various reasons.
 Services, for example, can be differentiated based on their price, as a higher price is generally associated
with better quality.
 Another differentiating factor between services and goods as far as pricing is concerned, is the cost
component involved. The fixed cost is high and the variable costs are low for a service, when compared to
a product.
 : The marginal cost involved in serving a customer in restaurants is negligible while the fixed cost of
establishing and maintaining the restaurant is high.
 Therefore, a major part of the price paid by the customers is directed towards covering the fixed costs of
the service provider. In case of a product, a major part of the price paid by the customer goes towards the
variable cost of producing that unit of the product.
 Another important aspect of pricing of services is that the price of the same service can be changed
depending on the demand for the service. Though this happens with some of the products which are
seasonal, it is basically dependent on demand as far as services are concerned.
 Example: The owner of a discotheque can increase or decrease the price of entry depending on the
demand. Similarly, banquet owners raise the tariff during the peak season and lower it during the lean
season
Promotion
Service consumers experience a high level of perceived risk when compared to consumers of products because of the intangible
nature of services. Service providers should aim to promote their services in order to eliminate the elements of this perceived
risk.
This can be best achieved by encouraging and promoting positive word-of-mouth publicity, developing strong brands, offering a
trial use of service for the customers and finally, by managing advertising and public relations effectively to clearly communicate
the message to the customers.
Promotion of service offers cannot be carried out in isolation without promoting the service provider as consumers will not be
able to rate the intangible services without knowing who the service provider is. Therefore, promotion of the service provider
becomes equally important in services.
Example: A bank customer can identify and relate to a service offer in a better way when the service provider (the bank
employees or the brand name) is known.
Another distinguishing factor for promotion of services is that the service personnel and other customers also participate in the
promotion process. Example: When a customer visits a restaurant or an entertainment park, he makes an assessment of the
service based on the behaviour of the service personnel and the kind of gathering there. Therefore, attracting the right crowd
and employing the right people is very important for a service provider. This provides plenty of opportunities for service
providers to promote their services.
Place
 In services, place relates to the ease involved in accessing a service. Due to the inseparability
of services, they are produced and consumed at the same place. This inseparability of
services makes it impossible for service providers to produce the service at a place where the
costs are low and sell it at a place where there is a high demand for it. Therefore, there is no
distribution channel for services marketing, or if at all there is one, it is very small.
 ,place decisions involve the following: The physical location of the service providerís
outlet.
 Telecom network companies for example, are striving to provide their patron stores to
improve accessibility to their services.
 The physical appearance and ambience of the place of service offering. The ambience in a
bank makes the waiting customers satisfied or dissatisfied.
 The decision to use particular types of intermediaries to offer easy accessibility to the
customers and improve operational efficiency of the organization. For example, the decision
of a theatre owner to sell movie tickets either directly or through operators like
bookmyshow.com.
 People
 Many service organizations involve their personnel both at the point of frontline delivery and
during the production process that does not involve the final consumer.
 Thus, the service personnel have an important role in not only designing the service, but also in
delivering it.
 Many services involve consumers as co-producers in designing the service offering to suit their
individual preferences. In these cases, the service personnel play an important role in helping
the end consumer present his requirements precisely.
 Example: In a salon, the service provider involves the customer also in the service and asks him
various questions to ascertain his desires so that they can give the customers satisfaction.
 The perception of a service by a customer also depends on the other customers receiving the
same service. Basically, the image of the service is largely affected by the views and
characteristics of other users. Example: A hotel like Le Meridian has developed the image of an
elite-class hotel with high-spending and high-profile visitors. Further, the behaviour or
performance of other consumers largely affects the service production and delivery process.
Fellow consumers have the power to either degrade the service quality or elevate it.Example:
When a person behaves badly at a restaurant, the total experience of others gets negatively
affected. Similarly, when a customer behaves pleasantly in a restaurant and creates a good
ambience, it enhances the experience of other customers as well.
 Process
 The production and delivery process in the manufacturing sector is easier than in the services
sector. Marketers of services are often confused, as there is little difference between marketing
and operations management in services. This is because the production, delivery and
consumption of services take place simultaneously.
 Example: A person in a movie theatre is required to purchase the ticket first, get his tickets
checked at the security clearance and then get inside. Customer service encounters have an
impact on the quality of service delivered by the organization. A service encounter is the actual
time period during which an interaction takes place between the service provider and the
customer. Among all the service encounters, a few are very important for completing the service
delivery process on a successful note.
 . Over the years, some service organizations have mechanized their service processes to reduce
the element of human judgment and error in service delivery. Example: Movie theatres have
introduced ticket kiosks to offer convenience to customers and also reduce the human element
in the service delivery process.
 This mechanization helps reduce labour costs which along with competition in the service
industry have increased tremendously.
 Organizations have also started involving customers in the production process to reduce costs.
Though some customers expectations are not met, others are ready to get involved in the service
production activity for lower prices. Example: A restaurant offering self-service can save on labour
Physical Evidence
 Service customers experience a greater perceived risk as they cannot rate a
particular service until it is consumed. Therefore, service providers should
try to attach an element of tangibility to their service offering. The physical
evidence can be in any form, for example, brochures or TV commercials
showing the details of a holiday destination, pleasant and courteous
behaviour of the service personnel in a bank, the location and ambience of
a food outlet,
Starbucks
Service Marketing mix
 Starbucks was founded in 1971 by Jerry Baldwin, Zev Siegl, and Gordon
Bowker. At first, the coffee company only sold coffee beans and didn’t offer
the premium coffee drinks it's known for now.
 The famous logo, inspired by Norse woodcutting that contained a siren,
the mermaid-like figure has been with the company since its inception
(although it has undergone a few redesigns).
 In 1986, the original owners sold Starbucks to former manager Howard
Schultz, who took the brand and helped build it into the coffee behemoth
it is today.

 Starbucks has changed from the bean roaster of the 1970’s to the coffee inspired drink shop of today.
 The original vision of Starbucks is reflected in their initial mission statement which was:
 “Establish Starbucks as the premier purveyor of the finest coffee in the world while maintaining our
uncompromising principles while we grow.”
 After Howard Schultz bought the company from its founding members in 1987 the company has focused on
creating Starbucks to be the “Third Place.” The idea of the third place is one that exists between work and
home.
 It was the idea of the third place that created the new mission statement for Starbucks which is:
 “To inspire and nurture the human spirit – one person, one cup and one neighborhood at a time.”
 Starbucks focuses on creating that personal connection between their customers, their baristas and their
organization.
 As you can see from their mission statement, Starbucks is all about connecting with their customers.
 But who are their customers?
 According to a research report done in April 2017, the target audience for Starbucks is men and women in the middle to upper classes who
can afford Starbucks higher priced beverages regularly.
 So how do they convince people to fork over that kind of cash, when they could just have coffee at home?
 They offer their target audience an experience when they come into their stores.
 By focusing on the third place and giving their customers a place to be and interact, they make the price of the drink worth it in the eyes of
their customers.
 There is something comforting about ordering a good cup of coffee and being encouraged to sit in the shop with your laptop and work.
That’s the experience Starbucks provides.
 Key Takeaway: Target a specific audience. Even if your business-to-consumer company could sell to anyone, you dilute your message and
experience when you don't target specifically and hold fast. Define your target audience and deliver an experience they want, every time.
 Let’s start with their logo and branding design.
 Over the course of 47 years, the Starbucks logo alone has gone through four different redesigns to create the iconic symbol that graces your
coffee cup today.
 According to Work Design Group, when Starbucks decided to revamp their branding in 2011, they faced a specific challenge.
 By operating in 55 different countries, they needed a brand design that would appeal to a broad audience base. Thus the latest logo
What Does Starbucks’ Marketing Mix
Look Like?
 Product
 Starbucks’ product has to be high quality to get their target audience to
justify buying it. You’re paying for premium coffee which means it needs to
taste better than the same iced macchiato that you could get at a
McDonald’s drive-through for less.
 It’s being able to craft a high-quality product every time that keeps people
coming back. Not to mention their barista promise, that if you don’t like
your drink, they’ll fix it.
 Price
 Starbucks sells their coffee at a premium price, or at least 25% higher than
value brands. In 1990, only three percent of the coffee sold in the United States
was sold at premium prices. By 2000, that number rose to 40% in what the
Harvard Business Review calls, “The Starbucks Effect.”
 In 1990, Starbucks sold their coffee at least 25% higher in price than value
brands.
 By offering customers exceptional drinks and food, Starbucks can charge more
for them. Why? Because people are willing to pay for it.
Promotion
 CONSISTENT BRANDING
 Starbucks uses a large variety of channels to market their product from
social media to TV spots and ads. It’s their mix of marketing media that
makes their brand recognizable, and it’s the consistent message that
comes across every time that makes them stand out.
 All of that promotion isn’t cheap. However, compared to other major
global brands like Apple and Nike, Starbucks spends significantly less on
their marketing and can still make an impact
 Every piece of content they publish follows the same visual and language
guidelines that customers have come to expect from the coffee giant. Take
a look at the cohesiveness between the following examples.
The photo is bright, modern, clean, and reflective
of the Starbucks brand. The language in the post
describes their new espresso shot in the same
way that they would if they were chatting with a
customer in the store, short, sweet, and to the
point.
Web Pa
Web Page
Now let’s say that the Instagram post caught your
attention. It intrigued you to the point where you wanted to
learn more. So you grab your laptop and find the landing
page for Starbucks’ brand new blonde espresso:
On that page you’ll see consistent copy, except this time
you’ll find a little bit more about why Starbucks has
brought out the blonde espresso. They also help cater to
their audience and show different recipes that their
customers can order to try the new shot.
Video
 https://www.youtube.com/watch?v=1flxTZKDBT4&t=4s
When you enter the store
 Consistent messaging, imagery, and branding is key to delivering a lasting
message to your customers.
 Every piece of content that was part of this campaign was flawlessly
designed and matched perfectly. From first touch to final purchase, the
experience is consistent.
 That level of consistency should be part of every piece your brand creates.
Place
Read anything about Starbucks, and they’ll probably
mention the idea of "the third place." Their efforts to
create a space where people want to come and hang out
and relax. They do this by creating a similar environment
in every Starbucks location.

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SM Unit 1.pptx

  • 1. Growth of Service Sector Economy As India moves increasingly toward a services economy, marketers need to know more about marketing service products. On a simplistic note, one can say that services are activities or benefits that one party can offer to another that are essentially intangible and do not result in the ownership of anything. Thus we see how services are different from goods. During the past decade services have increasingly assumed an important role in the Indian economy. Ever since this trend was set in the nineties, services have gained dominance. The competition, simultaneously, in service organisations, is becoming intense and severe. As a result these organisations have to have a more professional approach to managing their businesses. Perhaps it is in this context that the role of marketing is gaining importance in service organisations.
  • 2. Defining Services  Kotler and Bloom, in 1984, defined services as any activity or benefit that one party can offer to another that is essentially intangible and does not result in the ownership of anything. Its production may or may not be tied to a physical product.  According to Gronross, a service is an activity or series of activities of more or less intangible nature that normally, not necessarily, take place in interactions between the customer and service employees and/or physical resources or goods and/or system of the service provider, which are provided as solution to customer problems.
  • 3. Understanding Service Characteristics  As our knowledge of the characteristics of services grows, so does our ability to deal with them from both an economic and marketing perspective. Services are intangible, inseparable, variable, and perishable. Each characteristic poses problems and requires strategies to deal with those problems
  • 4. Characteristics of Services  Intangibility means that unlike goods, services cant be seen, touched and felt, tasted or smelled or even heard before they are purchased.  Inseparability suggests that services are produced, distributed, and consumed simultaneously. In the case of manufactured goods, production takes place in the production unit; thereafter the goods are kept in inventory and transported to the distribution outlet from where the consumers pick them up for consumption.  Heterogeneity means that services delivered generally vary in quality, time consumed in delivery, and the extent of service provided. Since people deliver most services, they are variable.  Perishibility means that services cant be stored Example: For Airlines, in a particular flight, vacant seats remain unsold, whereas in the case of manufactured goods, unsold items can be put into inventory and can be sold the next day
  • 5. More Intangible than Tangible A good is an object, a device, a thing. A service is a deed, a performance, an effort. When a good is purchased, something tangible is acquired; something that can be seen, touched, perhaps smelled or worn. When a service is purchased, there is generally nothing tangible to show for it. Services are consumed but not possessed, therefore the absence of tangible features means that it is difficult for the seller to demonstrate or display services and for buyers to sample, test, or make a thorough evaluation. To reduce uncertainty, buyers look for signs or evidence of service quality. Therefore, the service provider’s task, according to Levitt, is to “manage the evidence” and to “tangibalise the intangible”. Shostack even summarised that most market offerings are a combination of tangible and intangible elements. It is whether the essence of what is being bought is tangible or intangible that determines its classification as a good or a service.
  • 6. Less Standardised and Uniform  It is argued that it is often impossible to assure consistency in the services provided by a seller or to standardise offerings among sellers of the same service, while it is possible to offer consistency and uniformity of products.  Levitt argues that such a distinction has limited value because it is a production oriented approach as even an identical generic product will be differentiated when it is viewed as offered product for sale. Thus, while the core product may be uniform, the process will always be differentiated. Secondly, Levitt argues that owing to the industrialisation of services, their production can no longer be viewed as being heterogeneous.  Attempts have been made to improve productivity in the service sector by the introduction of technology. Uniformity can be achieved by substituting equipment and machinery for labour.  Hostage suggested that service firms could also reduce variability by training the service providers in appropriate responses to each customer situation. They can also monitor customer satisfaction through suggestion and compliant system so that poor service can be detected and corrected.
  • 7. Simultaneous Production and Consumption  Services are typically produced and consumed at the same time. The relationship between production and consumption therefore dictates that production and marketing are highly integrated processes. Example: The telephone company produces telephone service while the telephone user consumes it.  Generally, goods are produced, then sold, and then consumed. Services, on the other hand, are usually sold first, then produced and consumed simultaneously.  The service provider and the client are often physically present when consumption takes place. Sasser observed that the firm is unable to store or transport services that only direct distribution is possible, thereby potentially limiting the number of markets the firm can cover. Apart from the stress laid on right place and right time in case of distributing goods, there is additional importance given to the performance of service in the right way as well
  • 8. Perishability  Kurtz and Boone observed that the utility of most services is short-lived; therefore they cannot be produced ahead of time and stored for periods of peak demand. The perishability of services is not a problem when demand is steady because it is easy to staff for the services in advance.  When there are wide fluctuations in demand there should be a highly flexible production system or idle productive capacity. Sasser has described several strategies for producing a better match between demand and supply in a service business. On the demand side, the firm can make use of differential pricing, cultivating non-peak demand and developing complementary services.  On the supply side, for effective matching with demand, the firm may hire part-time employees to serve peak demand; peaktime efficiency routines can be introduced, facilities for future expansion can be developed, and increased consumer participation can be encouraged.
  • 10. Product vs Services  Levitt has suggested, ìThere are no such things as service industries. There are only service industries whose service components are greater or less than those of other industries. Everybody is in service. The point that Levitt was trying to put across is that with almost every tangible core physical product, an intangible service component is associated. Therefore, everybody is in service. Ms G Lynn Shostack, the Vice- President of Citibank, suggested that marketing entities are combinations of intangible and tangible elements that are distinct and discrete. If these absolute tangible and intangible elements are taken to the two ends of a continuum, we can observe that all goods and services dont fall at one place. There is a range that varies from absolute tangible goods like salt to an absolute intangible service like education
  • 11.
  • 12.  Theodore Levitt proposed the other approach of distinction between various goods. According to him, goods can be put into two categories, namely, search goods and experienced goods. Search goods are generally those which are packaged goods and the customer can see, evaluate and try them prior to purchase.  Example: Car, shampoo, etc. Experience goods, on the other hand, are those which one can see or evaluate after purchase. Example: Holidays, teaching, etc  Some persons call search goods as tangible goods and the others as intangibles. There is a range between the two extremes and there could be certain products falling in this range, as explained in Figure 1
  • 13.
  • 14. Contribution of Service Sector to the Economy  Within a short span of 50 years since independence, the contribution of the service sector in India to the country’s GDP is a lion’s share of over 60%. However, it still employs only 25% of the labour force.  IT-BPM/ Fintech  The IT/ITeS & Fintech segments provide over $ 155 bn in gross value add and have the potential to grow between 10 -15% p.a. Exports form its largest component. So far, our key advantage has been low - cost labour arbitrage in a predominantly English - speaking country. Going forward, the IT and ITeS segments require significant upskilling to move beyond a ‘low - cost low value add service provider’ to a ‘high value add partner’.  Indian IT companies can also leverage their skill sets to provide fintech solutions to global financial customers. Financial risk management services, insurance, natural disaster modelling and underwriting are examples of high value add services performed within India for a global audience.
  • 15.  Healthcare & Tourism  The current contribution of the healthcare industry is over $ 110 bn and is expected to touch $ 280 bn by 2020. Availability of world - class medical facilities, skilled doctors, technicians and pharmaceuticals are some of our advantages. With digital communication and interfaces, diagnostic medicine can also be tapped into as a service for global customers.  Similarly, for tourism, India is renowned for its places of natural beauty and historical significance. Tourism presently contributes $ 47 bn to the country’s GD, compared with $ 115 bn for China. Thus, tourism has exponential possibilities to boost the Indian services sector in the next decade.
  • 16.  Space  India captured the world's attention last February when it broke the record for launching the most number of satellites into space. Moreover, this was done at a fraction of the cost incurred by other space powers. Indian services in the space domain, with proven expertise in multiple launch technologies, provide it with a significant advantage over its peers in the global space transportation industry. Our launch capabilities have a near 100% track record. Many countries are actively looking to piggyback on India’s launch facilities. This demonstrates great potential. The government is actively proving its ability, but more can be done to build capacity in military and non - military space applications. In this context, public - private participation is key to ensure the flow of capital, as well as to strengthen competencies in this area.
  • 17.  Logistics & Transportation  India’s natural coastline and vast river network give it a competitive edge in providing transportation and logistics services, both domestically and internationally. These can be classified into ports and ports services, warehousing, trans - shipment services, e - logistics, inland waterways for freight and passengers, expressways and dedicated freight corridors. India’s logistics service sector itself is expected to grow from $ 115 bn to $ 360 bn by 2032.  Other services  Media & Entertainment (animation, gaming, dubbing), Education (online platforms such as MOOC), and Sports (IPL, IFL, Sports Management), Legal/ Paralegal services, Risk management and advisory functions, etc. are areas that can lead to an immense contribution of service industry in the Indian econom
  • 18.
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  • 26. The Service Triangle Management Model  There is a revolution taking place in the service industry, necessitating a radical change in every service professionalís perspective. Two models typify the change in the service perspective today:  The Industrial Management Model: This is prevalent today and is a hangover from the industrial era.  Firms that follow this model fully believe that the factors that bring in the revenue are advertising, sales promotion, accessibility, distribution and locational advantages. They are of the opinion that the cost drivers are personnel, operations and that these should be controlled. Even service sectors that seek price-competitive advantages follow this method  Example: Jewellers of Mumbai employing Bengali goldsmith. the myriad call centres that are sprouting all over India today. To get clients and projects, they are pursuing cost-cutting measures as the means to control expenses  The Market-focused Management Model: This is the model which can be used by service firms as a replacement to meet the new environment changes for survival.  The Market-focused Management Model focuses on the components of the firm that facilitate the firmís service delivery system. It proposes that the firm should be supportive of those personnel who serve the customers and interact with them. In other words, there is more emphasis by the organisation on those employees who are in the front line. The support is in the form of equipment, office space (hygiene factors), moral support, motivation initiatives, career growth and money
  • 27. The Service Triangle  The Service Triangle framework depicts the relationships among three groups of the service organisation:  The service strategy,  Systems embedded in the organisation and  The people of the organisation. The customer is at the centre, interacting with each of the group
  • 28.
  • 29.  The framework has the following six relationships:  The service firmís strategy must be communicated to its consumers: This would not only apprise the consumer about the firmís service product and its distinguishing features but also about its commitment for delivery.  . The service strategy also needs to be communicated to the firms employees: This would ensure transparency, eliminating misunderstandings and aid in sincerity of commitment percolating down the management levels.  There should be consistency in the service strategy and the systems that are developed to run the day-to-day operations to achieve the strategic goal. Systems would be designed only after the service strategy becomes clear and is agreed on. The systems would then greatly aid the service transactions/encounter. This would greatly affect the feeling of the customers, which would lead to their satisfaction
  • 30.  The impact of organisational systems on customers:  This would in turn greatly influence their service experience. Example: Continuing with the Thomas Cook example, if the organisational systems are faulty, like the communication to the inbound tourists (the itinerary details), or if a Thomas Cook employee is not aware of the latest currency exchange rates or the hotel tariffs - then the customer is discouraged and leaves with a lasting impression of the organisation as being inefficient and incompetent.  The importance of organisational systems and employee efforts: Rules and regulations should aid an an employee in giving of his best, not hinder him in his service transactions. ìGiving someone the freedom to take responsibility releases resources that would otherwise remain concealed,î said Jan Carlzon, the legendary head of Scandinavian Airlines System (SAS). Carlzon was responsible for turning around SAS. Organisational systems should ìtransform people from administrators (read clerks) to leaders and facilitators.î The rules and regulations should empower the employee and facilitate him in intrapreneurship-entrepreneurship inside an organisation.
  • 31.  . The interaction between the customer and service provider: It is these interactions that give rise to service encounters or critical incidents. They are also called Moments of Truth (MOT). The quality of these interactions is the source of customer satisfaction.  Example: An insurance company might profess to be very modern, high- tech and big, and boast of versatile products. But if the quality of transaction with the customer is not pleasant, the customer will have a negative perception, which actually is the measurement of the quality of insurance service by the company.
  • 33.  The Company  This is the organisation that has dreamed up the service product, and its various benefits. It offers the service product to the customer to achieve its service goals to the customers. Example: East India Hotels, which owns and manages the Oberoi brand of hotels, offers expensive accommodation, entertainment, leisure, etc., for the upper crust of society. Autoriders have collaborated with Avis/Hertz-Rent-A-Car to provide a fleet of cars for rental usage to corporate and well-heeled individual customers.  The Customer  The customer is the one who wants his needs and desires satisfied. He will do so by consuming the service product. Example: Romesh Bhandari wants a loan to purchase a car. He gets a loan from ICICI Bank at a certain rate of interest. The Sharma family is bored and therefore goes to Essel World on a public holiday. They have a grand time.  The Provider  They are the internal customers of an organisation who invariably complete the service transaction on behalf of the company. They are mostly employees, but also include franchisees, channel partners, distributors, wholesalers, retailers, etc. Example: Andromeda is the largest Direct Sales Agent (DSA) for Citibank and successfully sells its multibrand cards successfully. Karvy Consultants and LIC, Reliance, etc. are other examples for this.
  • 34.  Three different types of marketing take place during the service transaction amongst the three entities:  External Marketing: The company does external marketing on the customer. It promises benefits, explains features and assures satisfaction by way of advertising, public relations exercises and other forms of corporate communication. It uses mass-media to convey its promises. It ìmakes promisesî to the customers.  Internal Marketing: The Company does internal marketing to its providers. The company has to provide working space like offices, and equipments, like computers, and telephones to its provider. It also has to recruit, select and trained appropriate employees, channel partners, and franchisees. It enables the providers to complete the service transaction. The company ìenables its promisesî.  Interactive Marketing: The providers do interactive marketing with the customer. The provider is the one who interacts with the customers. The provider is the face of the company and represents the company. Both the customer as well and provider get instant feedback about each other during a service transaction. Their transaction reflects the perception of the quality of the service. The provider ìkeeps the promisesî made by the Notes company to the customers
  • 35. SERVICE MARKETING MIX  The four traditional Ps of the marketing mix - product, place, price, and promotion are adequate for marketing a product.  However, they fail to cover the following aspects, which differentiate products from services and are:  The product element involves only tangible aspects and is therefore not appropriate for services, which are basically intangible in nature. Example: The strategy used to design and launch a new motorcycle model cannot be adopted for launching a new service as a variant.  A part of the promotion of services usually takes place at the time of consumption itself. This is not so in the case of a product. In fact, the people involved in service production handle the promotion too in most cases. Example: The way in which a waiter at a restaurant provides service to the customers is a form of promotion of the service. However, the promotion element of the traditional marketing mix does not take this difference into consideration.  In the Indian scenario, the public sector produced most of the services until very recently (it still produces many services like rail transport). Very often still, the end consumer pays the standardized and subsidized price, and this aspect is ignored by the price mix.  The dual role played by service customers as co-producers and end consumers in the production of service goes unnoticed by the four traditional Ps.  The four traditional Ps fail to capture the importance of distribution for services. In most of the services, the production and consumption takes place at the same time; therefore, the distribution channel is either absent or is very small.  Further, consumers are unable to perceive the quality standards of services before consumption. On the other hand, marketers are not able to identify and measure the elements of the marketing mix that can deliver quality
  • 36.  Services have special characteristics like perishibility, intangibility and inseparability, which distinguish them from goods.  People, process and physical evidence play a greater role in the marketing of services than in the marketing of products.  Product  Marketers have identified three levels in developing the product element of the marketing mix as far as services are concerned.  The core level aims to satisfy the important needs of customer while the tangible level manages the appearance of the product. The augmented level involves the addition of supplementary services to the basic offering.  These three levels can be condensed into two, the core level that caters to the basic benefits and a secondary level which includes the tangible as well as the augmented service levels. The core level basically deals with the service offering while the secondary service level deals mostly with the delivery of service.  Example: The core service of a restaurant is to serve good food to the customers while the secondary service includes providing them with a good ambience. It is easy to differentiate products from one another when compared to services
  • 37. Pricing  The pricing of services is very different from the pricing of goods for various reasons.  Services, for example, can be differentiated based on their price, as a higher price is generally associated with better quality.  Another differentiating factor between services and goods as far as pricing is concerned, is the cost component involved. The fixed cost is high and the variable costs are low for a service, when compared to a product.  : The marginal cost involved in serving a customer in restaurants is negligible while the fixed cost of establishing and maintaining the restaurant is high.  Therefore, a major part of the price paid by the customers is directed towards covering the fixed costs of the service provider. In case of a product, a major part of the price paid by the customer goes towards the variable cost of producing that unit of the product.  Another important aspect of pricing of services is that the price of the same service can be changed depending on the demand for the service. Though this happens with some of the products which are seasonal, it is basically dependent on demand as far as services are concerned.  Example: The owner of a discotheque can increase or decrease the price of entry depending on the demand. Similarly, banquet owners raise the tariff during the peak season and lower it during the lean season
  • 38. Promotion Service consumers experience a high level of perceived risk when compared to consumers of products because of the intangible nature of services. Service providers should aim to promote their services in order to eliminate the elements of this perceived risk. This can be best achieved by encouraging and promoting positive word-of-mouth publicity, developing strong brands, offering a trial use of service for the customers and finally, by managing advertising and public relations effectively to clearly communicate the message to the customers. Promotion of service offers cannot be carried out in isolation without promoting the service provider as consumers will not be able to rate the intangible services without knowing who the service provider is. Therefore, promotion of the service provider becomes equally important in services. Example: A bank customer can identify and relate to a service offer in a better way when the service provider (the bank employees or the brand name) is known. Another distinguishing factor for promotion of services is that the service personnel and other customers also participate in the promotion process. Example: When a customer visits a restaurant or an entertainment park, he makes an assessment of the service based on the behaviour of the service personnel and the kind of gathering there. Therefore, attracting the right crowd and employing the right people is very important for a service provider. This provides plenty of opportunities for service providers to promote their services.
  • 39. Place  In services, place relates to the ease involved in accessing a service. Due to the inseparability of services, they are produced and consumed at the same place. This inseparability of services makes it impossible for service providers to produce the service at a place where the costs are low and sell it at a place where there is a high demand for it. Therefore, there is no distribution channel for services marketing, or if at all there is one, it is very small.  ,place decisions involve the following: The physical location of the service providerís outlet.  Telecom network companies for example, are striving to provide their patron stores to improve accessibility to their services.  The physical appearance and ambience of the place of service offering. The ambience in a bank makes the waiting customers satisfied or dissatisfied.  The decision to use particular types of intermediaries to offer easy accessibility to the customers and improve operational efficiency of the organization. For example, the decision of a theatre owner to sell movie tickets either directly or through operators like bookmyshow.com.
  • 40.  People  Many service organizations involve their personnel both at the point of frontline delivery and during the production process that does not involve the final consumer.  Thus, the service personnel have an important role in not only designing the service, but also in delivering it.  Many services involve consumers as co-producers in designing the service offering to suit their individual preferences. In these cases, the service personnel play an important role in helping the end consumer present his requirements precisely.  Example: In a salon, the service provider involves the customer also in the service and asks him various questions to ascertain his desires so that they can give the customers satisfaction.  The perception of a service by a customer also depends on the other customers receiving the same service. Basically, the image of the service is largely affected by the views and characteristics of other users. Example: A hotel like Le Meridian has developed the image of an elite-class hotel with high-spending and high-profile visitors. Further, the behaviour or performance of other consumers largely affects the service production and delivery process. Fellow consumers have the power to either degrade the service quality or elevate it.Example: When a person behaves badly at a restaurant, the total experience of others gets negatively affected. Similarly, when a customer behaves pleasantly in a restaurant and creates a good ambience, it enhances the experience of other customers as well.
  • 41.  Process  The production and delivery process in the manufacturing sector is easier than in the services sector. Marketers of services are often confused, as there is little difference between marketing and operations management in services. This is because the production, delivery and consumption of services take place simultaneously.  Example: A person in a movie theatre is required to purchase the ticket first, get his tickets checked at the security clearance and then get inside. Customer service encounters have an impact on the quality of service delivered by the organization. A service encounter is the actual time period during which an interaction takes place between the service provider and the customer. Among all the service encounters, a few are very important for completing the service delivery process on a successful note.  . Over the years, some service organizations have mechanized their service processes to reduce the element of human judgment and error in service delivery. Example: Movie theatres have introduced ticket kiosks to offer convenience to customers and also reduce the human element in the service delivery process.  This mechanization helps reduce labour costs which along with competition in the service industry have increased tremendously.  Organizations have also started involving customers in the production process to reduce costs. Though some customers expectations are not met, others are ready to get involved in the service production activity for lower prices. Example: A restaurant offering self-service can save on labour
  • 42. Physical Evidence  Service customers experience a greater perceived risk as they cannot rate a particular service until it is consumed. Therefore, service providers should try to attach an element of tangibility to their service offering. The physical evidence can be in any form, for example, brochures or TV commercials showing the details of a holiday destination, pleasant and courteous behaviour of the service personnel in a bank, the location and ambience of a food outlet,
  • 43. Starbucks Service Marketing mix  Starbucks was founded in 1971 by Jerry Baldwin, Zev Siegl, and Gordon Bowker. At first, the coffee company only sold coffee beans and didn’t offer the premium coffee drinks it's known for now.  The famous logo, inspired by Norse woodcutting that contained a siren, the mermaid-like figure has been with the company since its inception (although it has undergone a few redesigns).  In 1986, the original owners sold Starbucks to former manager Howard Schultz, who took the brand and helped build it into the coffee behemoth it is today. 
  • 44.
  • 45.  Starbucks has changed from the bean roaster of the 1970’s to the coffee inspired drink shop of today.  The original vision of Starbucks is reflected in their initial mission statement which was:  “Establish Starbucks as the premier purveyor of the finest coffee in the world while maintaining our uncompromising principles while we grow.”  After Howard Schultz bought the company from its founding members in 1987 the company has focused on creating Starbucks to be the “Third Place.” The idea of the third place is one that exists between work and home.  It was the idea of the third place that created the new mission statement for Starbucks which is:  “To inspire and nurture the human spirit – one person, one cup and one neighborhood at a time.”  Starbucks focuses on creating that personal connection between their customers, their baristas and their organization.
  • 46.  As you can see from their mission statement, Starbucks is all about connecting with their customers.  But who are their customers?  According to a research report done in April 2017, the target audience for Starbucks is men and women in the middle to upper classes who can afford Starbucks higher priced beverages regularly.  So how do they convince people to fork over that kind of cash, when they could just have coffee at home?  They offer their target audience an experience when they come into their stores.  By focusing on the third place and giving their customers a place to be and interact, they make the price of the drink worth it in the eyes of their customers.  There is something comforting about ordering a good cup of coffee and being encouraged to sit in the shop with your laptop and work. That’s the experience Starbucks provides.  Key Takeaway: Target a specific audience. Even if your business-to-consumer company could sell to anyone, you dilute your message and experience when you don't target specifically and hold fast. Define your target audience and deliver an experience they want, every time.
  • 47.  Let’s start with their logo and branding design.  Over the course of 47 years, the Starbucks logo alone has gone through four different redesigns to create the iconic symbol that graces your coffee cup today.  According to Work Design Group, when Starbucks decided to revamp their branding in 2011, they faced a specific challenge.  By operating in 55 different countries, they needed a brand design that would appeal to a broad audience base. Thus the latest logo
  • 48. What Does Starbucks’ Marketing Mix Look Like?  Product  Starbucks’ product has to be high quality to get their target audience to justify buying it. You’re paying for premium coffee which means it needs to taste better than the same iced macchiato that you could get at a McDonald’s drive-through for less.  It’s being able to craft a high-quality product every time that keeps people coming back. Not to mention their barista promise, that if you don’t like your drink, they’ll fix it.
  • 49.  Price  Starbucks sells their coffee at a premium price, or at least 25% higher than value brands. In 1990, only three percent of the coffee sold in the United States was sold at premium prices. By 2000, that number rose to 40% in what the Harvard Business Review calls, “The Starbucks Effect.”  In 1990, Starbucks sold their coffee at least 25% higher in price than value brands.  By offering customers exceptional drinks and food, Starbucks can charge more for them. Why? Because people are willing to pay for it.
  • 50. Promotion  CONSISTENT BRANDING  Starbucks uses a large variety of channels to market their product from social media to TV spots and ads. It’s their mix of marketing media that makes their brand recognizable, and it’s the consistent message that comes across every time that makes them stand out.  All of that promotion isn’t cheap. However, compared to other major global brands like Apple and Nike, Starbucks spends significantly less on their marketing and can still make an impact
  • 51.  Every piece of content they publish follows the same visual and language guidelines that customers have come to expect from the coffee giant. Take a look at the cohesiveness between the following examples. The photo is bright, modern, clean, and reflective of the Starbucks brand. The language in the post describes their new espresso shot in the same way that they would if they were chatting with a customer in the store, short, sweet, and to the point. Web Pa
  • 52. Web Page Now let’s say that the Instagram post caught your attention. It intrigued you to the point where you wanted to learn more. So you grab your laptop and find the landing page for Starbucks’ brand new blonde espresso: On that page you’ll see consistent copy, except this time you’ll find a little bit more about why Starbucks has brought out the blonde espresso. They also help cater to their audience and show different recipes that their customers can order to try the new shot.
  • 54. When you enter the store
  • 55.  Consistent messaging, imagery, and branding is key to delivering a lasting message to your customers.  Every piece of content that was part of this campaign was flawlessly designed and matched perfectly. From first touch to final purchase, the experience is consistent.  That level of consistency should be part of every piece your brand creates.
  • 56. Place Read anything about Starbucks, and they’ll probably mention the idea of "the third place." Their efforts to create a space where people want to come and hang out and relax. They do this by creating a similar environment in every Starbucks location.