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Service Output and Segmentation Essay Sample

Service Output and Segmentation Pages
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I. INTRODUCTION:
Some of the services ultimately desired by consumers include bulk-breaking, spatial convenience, Waiting and Delivery time, and providing a breadth of assortment. Segmentation involves identifying groups of consumers who respond relatively similarly to different treatments. In general, we want to find segments that contain people who are as similar as possible to each other while, simultaneously, being as different as possible from members of other segments. Thus, for example, members of what we might term a price sensitive food segment are likely to seek out the lowest priced retailers even if they are not located conveniently, buy larger packages, switch brands depending on what is on sale, and cut coupons. The “fussy” segment, in contrast, may shop either where the best quality is found or at the most convenient location, and may be brand loyal and not cut coupons. Note that not all members of each segment will be completely alike, and there is some tension between precision of description and cutting the segments into too small pieces. The idea, here, then, is for different channels to serve different consumers (e.g., price sensitive individuals are targeted by Food 4 Less while more upscale stores target the price insensitive).

A. Objectives:
* To explain what is service output and segmentation
* To identify the Service output four types of core benefits:
* Segmentation aims to match groups of purchasers with the same set of needs and buyer behaviour and to find attractive markets.

II. DISCUSSION:
Service Outputs
Service outputs (SOs) are the productive outputs of the marketing channel that end-users have demand and preference for. The SOs represent all of the aspects of the shopping experience that affect how an individual buys a product as opposed to simply what they buy. Service outputs are some benefits that end-users enjoy during purchase of any good. Consumers always have to go through some steps of decision making process while they go for shopping. They never want any delay in delivery or shortage of goods in stores. So marketers allow certain benefits that reduce consumers’ search, waiting time, storage, and financial risk. They make it possible by efficient market channels and proper coordination. Service output includes four types of core benefits:

1. Bulk-breaking
2. Spatial convenience
3. Waiting and Delivery time
4. Product variety/Breadth of assortment

These four service outputs are briefly described below:
Bulk Breaking:
Retailers provide bulk breaking benefit that allows consumers to purchase the goods in different quantities. It means breaking down bulk of goods into small units to make purchase handier for end-users. Customers can buy goods in bulk or in small quantity. Since price varies with quantity, consumers feel free to purchase. For example, soap is available in different sizes. There is large sized soap and also mini-sized soap. Other grocery items are also sold according to consumers’ preference. But in case of large quantity purchase, consumers often get discounts.

Spatial Convenience:
The spatial convenience refers to customers’ ability to purchase a product easily from any place regardless of distance. It saves transportation cost, search cost and time. Spatial convenience can be a competitive advantage for any small retail store. People prefer buying a product from any small but nearby retail store than remotely placed superstore. Spatial convenience depends on product type. Frequently purchased and low involvement products like daily goods should be located in nearby retail stores whereas expensive and exclusive items might be placed in some distant places. Consumers do not want to drive several miles for a pack of Biscuit. It should be sold just beside the home retail store. Waiting time and Delivery time:

It refers the time period that the end-users must wait between ordering and receiving goods. No consumer wants late delivery of goods.
But waiting time depends on product and situation. A match box must be delivered as soon as consumers ask for it. But in case it is a Television set, the waiting time will be longer. Marketers always try to reduce waiting time since it creates the impression of customer service. Product variety/Breadth of assortment:

It refers to the larger variety or collection of product that is available for the end-user to choose from when the make the purchase. Channel members supply same product of different variations to fulfill consumers’ individual needs. Product variety also attracts consumers and serves everyone’s’ purposes. The service is very important as some consumers are price oriented and others are quality oriented. Product variety ensures that types of consumers get the right type of product. For example, we have oranges imported from India, Thailand, and China etc. These are little bit differentiated in quality but very much in price.

Service output in B2B and B2C
In present days, the importance of service output has increased among all types of consumers. In B2B type activities outsourcing is a common trend now. Companies depend on each other for works to be done in efficient way and it requires higher service output. On the other hand, more service output is also required during downsizing as one employee’s work is given to another employee. Similarly in B2C, service output is necessary. Consumers are more time constrained and willing to spend a little time in shopping. They are also very knowledgeable now due to internet and other sources of information. They can search and evaluate alternative option during purchase of goods. So it is very much essential to emphasize on service output to give customers better service.

Segment-Target-Position (STP)

Segmentation:
* Segmentation is essentially the identification of subsets of buyers within a market that share similar needs and demonstrate similar buyer behaviour. The world is made up of billions of buyers with their own sets of needs and behaviour. * Segmentation: Identifying all segments for the product/service. To be useful, segments should be:

Measurable
Accessible (can you reach them)
Profitable
There are many ways that a segment can be considered. However the more general bases include: * By geography – such as where in the world was the product bought. * By psychographics – such as lifestyle or beliefs.

* By socio-cultural factors – such as class.
* By demography – such as age, sex, and so on.
Targeting
* is the second stage of the SEGMENT “Target” POSITION (STP) process. After the market has been separated into its segments, the marketer will select a segment or series of segments and ‘target’ it/them. Resources and effort will be targeted at the segment. * Also known as’ Niche marketing“

Niches do not ‘exist’ but are ‘created’ by identifying needs, wants, and requirements that are being addressed poorly or not at all by other firms, and developing and delivering goods or services to satisfy them and is not likely to attract too many competitors.

Positioning
* The third and final part of the SEGMENT – TARGET – POSITION (STP) process is ‘positioning.’ Positioning is undoubtedly one of the simplest and most useful tools to marketers. After segmenting a market and then targeting a consumer, you would proceed to position a product within that market. * Positioning is an essential component – and skill – in good marketing. Perceptual maps are used to determine the position of a product, firm, person, service or idea. Positioning maps or perceptual maps can be simple, yet very effective marketing tools. One definition of Positioning Theory is: the science of perceptual strategy. It is based on a theory that strategy can only be planned in the mind of the consumer, not the marketplace.

It is important to understand the levels of competition because positioning applies at all levels of competition. For example:

Product Level (e.g., Pepsi vs. Coke)
Category Level (e.g., Cola vs. Root beer)
Corporate Level (e.g., Pepsi Inc. vs. Coca Cola Company)
Industry Level (e.g., Beverage Industry vs. Snack food Industry)

III. DEFINITION OF TERMS
Service outputs – are some benefits that end-users enjoy during purchase of any good. Breaking bulk – breaking down bulk of goods into small units to make purchase handier for end-users. Spatial convenience – refers to customers’ ability to purchase a product easily from any place regardless of distance Waiting time and Delivery time – It refers the time period that the end-users must wait between ordering and receiving goods Outsourcing – is the process of acquiring services from outside an organization or business.

Product variety/Breadth of assortment – It refers to the larger variety or collection of product that is available for the end-user to choose from when the make the purchase. Segmentation – is essentially the identification of subsets of buyers within a market that share similar needs and demonstrate similar buyer behaviour Targeting – to select a demographic or other group of people to advertise to, and create advertisements appropriately Positioning – creating an identity in the minds of a target market

lV. CONCLUSION:
Without proper service output, marketers can not expect to sell products and satisfy the consumers. Market channel members must meet the need of service output for the sake of a profitable business. It is the benefit that consumers expect and deserve. Unless service output is maintained in a business, no organizational objectives or goal can be achieved. Customer satisfaction doesn’t derive from products only; it is the service output that makes it possible. Therefore I conclude that SEGMENTATION is Identifying all segments for the product/service while TARGETING real goal/objective in market that marketer want to reach. And the POSITIONING is: the science of perceptual strategy. It is based on a theory that strategy can only be planned in the mind of the consumer, not the marketplace.

V.REFERENCES:

http://www.marketingteacher.com/lesson-store/lesson-targeting.html http://www.businessdictionary.com/definition/niche-marketing.html. http://books.google.com.ph/books?id=HONkKWZFYvwC&pg=PA230&dq=service+output&hl=en&sa=X&ei=vkXxULivLo2SiAfG-YGIBQ&sqi=2&redir_esc=y#v=onepage&q=service%20output&f=false Segmentation for marketing channel design: Service Outputs, Coughlan, A.T., A, Anderson, E., Stern, L.W., and El-Ansary, A.I, 2005, Marketing Channels, 7th Edition, Prentice-Hall.

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