Chap. 6 - Marketing & Sales in LS Flashcards
How would you characterize the content and function of the “Marketing Mix” of a product or service?
The marketing mix is based on the idea to find an optimal “mix” of marketing-instruments for a specific target group of the marketing campaign.
The “classic” instruments of the marketing-mix are “Product”, “Price”, “Place” and “Promotion” Each instrument reflects a component in the value-mix in the decision process of a specific customer group to buy the product or a servce.
Please name three characteristics of a service and its managerial implications!
- Services are intangible
- Services cannot be inventoried
- Pricing is difficult
- Services cannot be easily patented
- Services are heterogeneous and can be hardly standardized
- Service delivery and customer satisfaction depend on employee and customer actions
- Service quality depends on many uncontrollable factors
- Services are characterized by simultaneous production and consumption
- Customer participate in and affect the transaction
- Customer affect each other
- Employees affect the service outcome
Please explain the components of the “Service Marketing Triangle” and the interaction between them! For what is it good for?
The Service Marketing Triangle describes the relationship between the three main stakeholders in the marketing process: the company (management), the customers and the employees/technology.
The external marketing is focused on the promise that was made from the company (management) to the customers
The internal marketing is focused on the enabling of employees / technology by the company (management) to fulfill the service promises
Interactive marketing is focused on delivering the service promises to the customer by the employees or used technology of the company.
The “Service Marketing Triangle” works as a checklist to identify management gaps between the making of service promises and the keeping of theses promises to the customer.
What are the 7 P’s in the Model for Services? Give for each “P” 2-3 examples of indicators that influence the service - expectations of customers!
The “Seven P’s” in the Marketing-Mix-Model for services are:
- Product (quality level, packaging, branding)
- Price (flexibility, price level, discounts)
- Place (used intermediaries, transportation, storage)
- Promotion (training of salespeople, publicity, internet/web-strategy)
- People (recruiting, training, motivation)
- Physical Evidence (facility design, used equipment, business cards)
- Process (flow of activities, degree of standardization, complexity)
Explain the following statement:
“Promotion and Communication of a service is to manage the controllable factors of customer expectation and be aware of the uncontrollable factors.”
The challenge of promotion and communication of a service is to find the right balance between the promises of the company and what the company actually delivers.
This balance creates the “customer expectation” about a specific service of the company. Parts of this expectation can be influenced by factors that can be controlled by the company - like corporate websites, the kind of personal selling etc.
On the other hand, there are uncontrollable factors in the promotion or communication of a service like word-of-mouth, social-media publications etc. which could weaken the messages of the controllable factors.
Please explain the importance of the coordination between internal and external marketing and communication activities in the marketing process of a service!
Internal marketing has two important dimensions:
- The vertical and horizontal communication between the management representatives of a service company and their employees explaining the contents and goals of the offered service
- The way how the employees are selling the service promises to the customers - personally, in customer service centers, service encounters etc.
The external marketing is focused on tools and factors how the service promise of the management is communicated in the best way to target customers using advertising, sales promotion, public relations or websites
Only if the external marketing communicates the right “promise-level” the internal marketing is able to fulfill the customer expectations and generates a lasting service experience.
Please name five major approaches to overcome the promotional- and / or communication-challenges in the marketing process of a service!
- Adress the service intangibility by narratives, tangible substitutes or testimonials of satisfied customers!
- Manage actively the service promises by creating a strong service brand and coordination of the external communication vehicles!
- Understand and manage customer expectations by making realistic promises, an offering of service guarantees, etc!
- Train /influence your customer target group by a pro-active management of customer education! Explain each step in the service process and clarify the expectations after the sale!
- Manage the internal marketing communication by better horizontal communication between the functional barriers of a company and a better vertical communication from top to middle management and operations
Why is “Pricing” so difficult in the service industries?
The biggest problem is the lack of customer knowledge of prices. This is caused by the following reasons:
- the service variability limits the knowledge about accurate prices on the market
- the service providers are unwilling or not able to estimate prices in advance of the performance
- the individual customers need a great variety of services
- the collection of prices itself is overwhelming in service industries
- service prices are usually not visible and therefore often the true costs of the offered service are unknown
In addition, the total cost for consuming the service includes for the customer monetary (price-based) costs and non-monetary costs (like time used for searching the service, the degree of convenience of ordering the service etc.)
What is the consequence of the low level of customer knowledge in service prices?
The consequence is, that the customer often uses “reference prices” for services and sees the price as the core indicator for service quality.
Which three approaches to service pricing do you know?
Explain them in brief! Which of these approaches are applied in which logistics service sectors?
- Competition-based pricing: the price is set by the competition on a market - not by a cost calculation.
- Cost-based pricing: the price is calculated as the sum of direct costs + overhead costs + a profit margin
- Demand-based pricing: the price (level) is mainly driven according to the customer perceptions of value
The competion-based pricing is applied for services that are highly comparable resp. can be standardized. This is the case for FTL transport rates with short contracts.
The cost-based pricing is helpful for pricing situations in which are the real costs for both parties (buyer and seller of the service) is intransparent. This is the case in complex, newly designed contract-logistics projects.
What are the main characteristics of a 3PL/Contract-Logistics service?
How would you define it?
- The contract in contract-logistics is longer than in conventional transport contracts. The average contract length is between 3 to 5 years
- The performed service in contract-logistics by an LSP consists of a complete outsourced “value package” - not only an isolated logistics function (like transport)
- The volume of the contract logistics project is usually > 1 Mio €/year
What are the full versions of the following abbreviations out of a contract-logistics tender process?:
- RFI
- CA or NDA
- RFQ
- LOI
- RFI = Request for Information
- CA or NDA = Confidental Agreement or Non-Disclosure-Agreement
- RFQ = Request for Quotation
- LOI = Letter of Intend
What is the difference between an RFI and an RFQ in a contract-logistics tender process?
The RFI (Request for Information) is a first rough description of the planned outsourcing project and is communicated by e.g. email to potential contract logistics service providers. They have to sign a confidentiality agreement before they can read it.
The RFQ (Request for Quotation) is a written document (could be > 100 pages long) published by the buying center (industry) after checking the incoming RFIs.
It consists: detailed descriptions about the logistics processes that should be outsourced, the requirements of the goods and information flow, the characteristics of objects and volumes which have to handled and a form of how the prices should be calculated and submitted by the contract logistics service provider in their proposals.
Please name the five phases of a contract logistics tender process!
- Phase 0: Project Management and Acquisition
- Phase 1: Searching for potential 3PL-Providers, and publishing of the RFI
- Phase 2: RFQ and Preparation of the Proposal
- Phase 3: Norming of Tenders and Negotiations
- Phase 4: Presentation and Choice of Partner
- Phase 5: Contract Design, Verification, and Closing
Please name three barriers of a smooth 3PL-Tender process from the perspective of the outsourcing industry (buying center)!
- Wrong judgments: Potential contract logistics service providers are not able to perform the required service quality. Nevertheless, they promised at the beginning of the tender process a lot, which cannot be verified or only in later stages.
- Non-plausible offers: the submitted proposals have sometimes inconsistencies and the calculation does not fit with the requirements of the demanded processes
- Too less customization of offers: because of time pressure and the need to save resources, contract logistics providers provide sometimes proposals or presentations in a too high degree of standardization.
