MANAGING SERVICE

PROMISES
 Provider Gap 4

CUSTOMER

Service Delivery External

COMPANY Communications to
The Customers
Communication
Gap

Part 6 Opener
 We Shall Discuss

Pricing of
Communication
Service
 Communications and the
Services Marketing Triangle

Company

Internal Marketing Vertical External Marketing

Communications Horizontal Communication
Communications Vertical Advertising
Sales Promotion
Public Relations
Direct Marketing

Employees Interactive Marketing Personal Customers

Selling Customer Service
Center Service Encounters
Servicescapes

Source: Parts of model adapted from work by Christian Gronroos and Phillip Kotler
 Approaches for
Integrating Services Marketing Communication

Manage
Customer
Expectations

Goal:
Manage Delivery Improve
Service greater than Customer
Promises or equal to Education
promises

Manage
Internal
Marketing
Communication
Pricing and services
Discuss three major ways that service
prices are perceived differently from
goods prices by customers

Articulate the key ways that pricing of

services differs from pricing of goods from
a companys perspective
Overview (cont.)
Demonstrate what value means to
customers and the role that price plays in
value

Describe strategies that companies use to

price services
PRICING AND SERVICES
Price -- Definition
The amount of money charged for a
product or service

the sum of all the values that

consumers exchange for the benefits of
having or using the product or service
Three Basic Marketing Price Structures and
Challenges Associated with Their Use for Services
Customer knowledge of service prices:
Service variability limits knowledge
Providers are unwilling to estimate prices
Individual customer needs vary
Collection of price information is overwhelming
Prices are not visible
Role of non-monetary costs:
Time costs
Search costs
Convenience costs
Psychological costs
Price as an indicator of service quality
 Three Basic Marketing Price Structures and
Challenges Associated with Their Use for Services
P= DC+OC+Profit
Challenges:
1. Costs difficult to trace.
Challenges: 2. Labor is more difficult to
1. Small firms may charge too price than materials.
little to be viable. 3. Costs may not equal the value
2. Heterogeneity of services that customers perceive the
limits comparability. services are worth.
3. Prices may not reflect
customer value.

Challenges:
1. Monetary price must be adjusted to reflect
the value of non-monetary costs.
2. Information on service costs is less available to
customers; hence, price may not be a central factor.
Four Customer Definitions of Value

Value is everything
Value is low price.
I want in a service.

Value is the Value is all that

quality I get for I get for all
the price I pay. that I give.
Pricing Strategies When the Customer Defines
Value as Low Price

Discounting
Odd pricing
Synchro-pricing Place, Time Quantity
Penetration pricing
Pricing Strategies When the Customer Defines
Value as Everything Wanted in a Service

Prestige pricing

Skimming pricing
 Pricing Strategies When the Customer Defines
Value as Quality for the Price Paid

Value pricing

Market segmentation pricing

 Pricing Strategies When the Customer Defines
Value as All That Is Received for All That Is Given
Price framing - Ancors

Price bundling
Complementary pricing
- Captive Pricing
- Two Part Pricing
- Loss Leadership
Results-based pricing
Summary of Service Pricing Strategies for
Four Customer Definitions of Value

Value is low price. Value is everything

I want in a service.
Discounting
Odd pricing Prestige pricing
Synchro-pricing Skimming pricing
Penetration pricing

Value is the quality Value is all that I get

I get for the price I pay.
Value pricing
Market segmentation
pricing
for all that I give.
Price framing
Price bundling
Complementary pricing
Results-based pricing