Designing a service promotion is not an easy task as it involves adding up tangible clues to the service and attracting the customers.
Also, the company has to take care to avoid all the pitfalls possible in terms of excess costs or dwindling sales in the post-promotion period.
A service provider should first identify the services to be promoted, choose the target audience for the promotions, estimate the value to be added to the service brand, decide the timing and duration of the promotional campaign, the techniques to be used, and finally, determine how the promotion is different from those of competitors.
These are described below:
1. Type of Service: The answer to this question depends heavily on the service provider’s situation in the market.
If the service provider is under heavy pressure from competition and his aim is to survive in the market, he may opt to promote his services accordingly.
If a service provider’s aim is to attract new customers, then he should opt to promote a low-risk and relatively inexpensive service which will do the job successfully.
Once new customers are attracted to the service, a service provider can sell other services apart from the original service offered (Cross-selling).
On the other hand, if the service provider can opt to increase the period of contract with customers.
For example, financial service providers can prolong the contract period of the customers to keep the competitors at a distance.
2. Target Customer: Service companies have an opportunity to target their promotional campaigns to a specific market segment or to the entire market.
For example, Disney World can promote its services to children below 12 years of age. This kind of promotion targeted at demographic segments is not possible in the packaged goods industry.
Further, services are flexible compared to packaged goods and have numerous opportunities for price differentiation.
For example, a packaged goods company cannot charge different prices for children and other customers on a bottle of health drink. However, a services company can charge different prices for adults and children while traveling.
3. Value Added to the Product/Brand: Service providers should be careful when assessing the value to be offered to the customer.
Factors like promotional objectives, costs of promotion, and customer perceptions of value should be considered while developing value promotions.
These can be of two types. In the first type of offering, the same service or an up gradation can be offered for a lower price, through price/quantity promotions.
In the other type, the customer is offered more for the same price through premiums and sweepstakes.
4. Timing of Promotional Campaign: Service providers often face the question of when should the promotional campaign be launched, for how long should it be run, and how frequently should it be offered. The timing of the promotional campaign depends on the demand fluctuations in the service demand.
For example, airlines can run promotional offers when the market demand increases for air travel or when the competition is strong in the market.
The duration of the promotional campaign should be based on the value of the service offering, the target consumer’s purchasing power, and finally, it should be extended to make sure that most customers are covered by the campaign.
The frequency of promotions depends on the existing competition in the market and the target customer’s purchase cycle.
5. Beneficiary of Promotions: Service providers should carefully identify the group of customers whose purchase behavior needs to be influenced by the promotional campaign.
After identifying the target customers, companies should verify if the end consumer is benefited directly.
For example, many business travelers are not personally benefited through the frequent flier programs because the discounts and premiums offered by airlines are redeemed by the company that employs them.
6. Differentiating a Promotional Campaign: Often, service providers find it difficult to differentiate their promotional campaigns from those of their competitors.
A service provider who has designed an innovative promotional campaign soon finds his competitor in the market imitating it
To avoid this, a service provider should design a promotional campaign that cannot be easily imitated by competitors.
Otherwise, it should enter into agreements with other service companies to develop joint-promotions that make it impossible for the competitors to imitate easily.