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Services Marketing in China
The marketing function can be considered as consisting of three key components: The marketing mix, the important internal elements or ingredients that make up an organization’s marketing program
By Strategic Management RewinAnder Research

The dynamics of most services markets have changed; low levels of competition have given way to vigorous and intense competition. In this competitive marketplace marketing has become a key differentiator between corporate success and failure.


Marketing is a process of perceiving, understanding, stimulating and satisfying the needs of specially selected target markets by channeling an organization’s resources to meet those needs. Marketing is thus a process of matching an organization’s resources to the needs of the market. Marketing is concerned with the dynamic interrelationships between a company’s products and services, the consumers’ wants and needs, and the activities of competitors.


The marketing function can be considered as consisting of three key components: The marketing mix, the important internal elements or ingredients that make up an organization’s marketing program; market forces, external opportunities or threats which the marketing operations of an organization interact with; a matching process, the strategic and managerial process of ensuring that the marketing mix and internal policies are appropriate to the market forces.


The marketing mix is one of the most universal concepts which has been developed in marketing. Most discussions of marketing focus around four key components of the marketing mix, called the 4Ps. These include: product, price, promotion and place. The concept of the marketing mix has gained wide acceptance in business.


Market forces comprise a number of areas which need to be considered, including: the consumer, the industry’s behavior, competitors and government and regulatory. The task of the manager in developing a marketing program is to assemble the elements of a marketing mix to ensure the best match between the internal capabilities of the company and the external market environment. A key issue in the marketing program is the recognition that the elements of the marketing mix are largely controllable by managers within the organization, and that the market forces in the external environment are, to a large extent, uncontrollable.


The success of a marketing program depends primarily on the degree of match between the external environment and the organization’s internal capabilities. Thus marketing executives need to monitor the external environment constantly and be prepared to alter their marketing mix to create a better match with market opportunities. Taken as a whole marketing in the services sector today still lags behind the consumer goods and industrial sectors. This can be at least partly explained by the relative lack of competition in many services businesses until recently. Other reasons include the complex nature of a service and the restrictiveness of the traditional 4Ps of the marketing mix.


Services and the marketing mix. It is therefore appropriate to reconsider the traditional marketing mix in the context of services. Three factors determine whether or not a specific element should be included in a firm’s marketing mix. These include the level of expenditure on a given ingredient in the marketing mix; the perceived level of elasticity in customer responsiveness; allocation of responsibilities. We consider the 4Ps model unnecessarily restrictive; an expanded marketing mix is more appropriate. This reflects the traditional elements of the marketing mix-----product, price, promotion and place, plus three additional elements---people, processes and the provision of customer service.


Customer service---There are several reasons for including customer service as an element in a services marketing mix. These include more demanding consumers requiring higher levels of service, the increased importance of customer service, and the need to build closer and more enduring relationships with customers. People---People are an essential element in both the production and delivery of most services.


People are increasingly becoming part of the differentiation by which service companies seek to create added value and gain competitive advantage. Process---Processes are all the procedures, mechanisms and routines by which a service is created and delivered to a customer.Process management is a key aspect of service quality improvement. The 4Ps model does not capture the full complexity of services marketing in practice and does not recognize the essential interrelationships between key aspects of marketing in service businesses.


The evolution of services marketing. Despite the recent emphasis on services marketing, there is still a considerable misunderstanding within much of the service sector as to what constitutes effective marketing. Service organizations have tended to move through a series of stages in seeking to adopt marketing. Which shows some of the main stages through which service firms typically evolve, including the following: selling, advertising and communications, product and service development, differentiation and competitor analysis, customer service, service quality, integration and relationship marketing.


These stages are illustrative and clearly not all service companies will go through all these stages of evolution. The last stage, integration and relationship marketing, involves the integration of past effort within a relationship marketing context. Including: Integrate various marketing initiatives; Capitalize on the use of data-based marketing techniques; Develop a more disciplined, realistic and focused approach to marketing planning; Focus on the development of a marketing oriented culture; Recognize the potential of external and internal marketing and its use in a number of relationship markets not usually considered in the domain of marketing activity; Increase profitability through improved customer retention.


Relationship marketing. The term relationship marketing was introduced during the 1980s and is a relatively new and evolving concept. An early definition is relationship marketing is the attraction, maintaining and in multi-service organization, enhancing customer relationships. The marketing mind set is that the attraction of new customers is merely the first step in the marketing process. Now the view of relationship marketing extends this definition. This broadened view has three complementary perspectives. The nature of the way the companies view their relationships with customers is changing. Emphasis is moving from a transaction focus to a relationship focus with the aim of long-term customer retention.


A broader view is emerging of the markets with which the company interacts. In addition to customer markets the organization also becomes concerned with the development and enhancement of more enduring relationships with other external markets including suppliers, recruitment, referral and influence, as well as internal markets. A recognition that quality, customer service and marketing activities need to be brought together.


A relationship marketing orientation focuses on bringing the three elements into closer alignment and ensuring their combined synergistic potential is released. Companies have six key market areas where they should consider directing marketing activity and where the development of detailed marketing plans may be appropriate. In addition to existing and potential customers, those markets are referral markets, supplier markets, recruitment markets, influence markets and internal markets.


Customer markets. Customers must, of course, remain the prime focus area for marketing activity. But the focus needs to be less on transactional marketing. Firms today are now starting to recognize that existing customers are easier to sell to and are frequently more profitable. However, whilst managers intellectually concur with this view, much greater emphasis and resources are often devoted to attracting new customers.


It is only when some breakdown in service quality occurs, and the customer leaves or is on the point of defection, that the existing customer becomes important. This is not to say that new customers or clients are not important—indeed they are vital to the future most service businesses. Rather a balance is needed between the effort directed toward existing and new customers.

Referral markets. The best marketing is that which is carried out by your own customers. But existing customers are not the only sources of referral. Referral markets go under many names—intermediaries, connectors, multipliers, agencies and so on. The current and potential importance of referral sources should be established and a plan developed for allocating marketing resources to them.


Efforts should also be made to monitor results and cost benefits. However it is worth emphasizing that developing these relationships takes time and that the benefits of increased marketing activity in this area may not come to fruition immediately.


Supplier markets. The relationship between an organization and its suppliers is undergoing some fundamental changes. The old adversarial relationship where a company tried to squeeze its suppliers to its own advantage, is giving way to a relationship based much more on partnership and collaboration. There is good commercial sense in this. Manufacturers spend over 60 percent of total revenue on goods and service from outside suppliers.


The aim is close cooperation between customer and supplier from a very early stage, mutual concentration on quality, commitment to flexibility, lowest costs and long-term relationships. From the marketing point of view, the concern is to sell the new attitudes implicit in such a collaborative arrangement both to suppliers and equally importantly, inside the company.


Recruitment markets. The key scarce resource for business organizations is no longer capital or raw materials—it is skilled people, a vital, perhaps the most vital, element in customer service delivery. Effectively marketing an organization to potential employees will become a vital success factor. Its recruitment literature was old fashioned and lacked visual impact. A marketing plan to try to improve the situation involved redesigning recruitment literature, sending the brightest partners on university visits with managers with interesting experiences to recount, and sponsoring awards and prizes at target universities.As a result of this marketing plan, the firm’s offers to acceptances ratio increased by nearly 200 percent within two years.


Influence markets. Influence markets tend to vary according to the type of industry or industry sector that an organization occupies. Companies involved in selling infrastructure items, will place government departments and regulatory bodies high on the list of markets they must address. Most companies also place the financial community in its various forms—brokers, analysts, financial journalists and so on—in the influence category.
Internal markets. Internal marketing involves two main concepts.


The first is that every employee and every department in an organization is both an internal customer and an internal supplier. The optimal operation of the organization is ensured when every individual and department both provides and receives excellent service. The second concept is making sure that all staff work together in a way that is aligned with the organization’s stated mission, strategy and goals. Internal marketing aims at ensuring that all staff provide the best representation of the organization through successfully handling telephone, mail, electronic and personal contacts with customers.


Internal marketing is recognized as an important activity in developing a customer –focused organization. In practice, internal marketing is concerned with communications and with developing responsiveness, responsibility and unity of purpose. The fundamental aims of internal marketing are to develop internal and external customer awareness and remove functional barriers to organizational effectiveness. Where internal marketing is concerned with the development of customer orientation, the alignment of internal and external marketing ensures coherent relationship marketing.


Determining market emphasis in relationship marketing. These six markets –customer, referral, supplier, recruitment, influence and internal, companies do need to develop some form of marketing strategy for each. The adoption of the relationship philosophy as a key strategic issue is more important than a written plan. Not all markets require equal levels of attention and resources.


A decision on the appropriate level of attention can be arrived at through the following steps: Identify key participants in each of the markets; Research to identify expectations and requirements of key participants; Review current and proposed level of emphasis in each market; Formulate the desired relationship strategy and determine if a formal market plan is necessary.


The six-markets illustrates how service organizations have a network of relationships with different markets. Each of these interactions needs to be managed, where appropriate with a formal strategy and marketing plan. The six-markets model has been used in a diverse range of service businesses to develop marketing plans for each of the six markets and to illustrate the relationship marketing concept. This model has proved a robust means of considering the network of relationships that services organizations need to address.


The essence of services marketing. The key managerial dimensions of services marketing: developing an effective service mission; services market segmentation; positioning and differentiation of services; the services marketing mix; marketing plans for services and the customer-focused service organization.


Five characteristics of Chinese market environment

Characteristic of the transitional Chinese market

1. Vast in territory, the prospect is enormous.

2. Excessive growth; fast change; the policy is changeable; the regulation is imperfect.

3. The market is in disorder; Imitation and infringement are serious.

4. Short-term direction; Excessive competition.

5. Regional difference, system difference, the industry difference, level differences of marketing are all very remarkable.


Marketing characteristic of the transitional Chinese market

1. Trap of the marketing channel --Extremely complicated marketing channel

2. The fake products overflow; intellectual property problem

3. Segmentation market difference

4. There are errors in the market research.

5. The marketing obstacle of State-owned enterprises and the monopolistic industries

6. The miss ratio of strategy planning is high.

7. In a puzzle about advertising operation

8. Chinese characteristics of relationship marketing

9. New product development of Chinese style

10. The brand construction of Chinese culture mode

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