Service Output and Segmentation

Topics: Marketing, Retailing, Service Pages: 6 (1707 words) Published: January 30, 2013
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. 

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...
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