Page 33 - MARKETING & PUBLIC RELATIONS EBOOK IC88

the policy is determined taking into consideration the specific situation and requirements of the
customer. A new plan can effectively be created by combining two or more plans. In the case of group
insurance or big business with corporate bodies, the premium and benefits are subject to negotiation.

The core product offered by all insurers will practically be the same. The differentiation and consequent
competitive advantage will be in the peripherals. The core is the event, or the risks, insured against. No
insurer has an exclusive privilege to cover any one kind of risk. An insurer may find it feasible to
specialize in a kind of risk, which other insurers may refrain from. That would not be because they
cannot. It would be because they do not want to. Health insurance is one such example.

When the risk covered is the same, the peripherals that make the differentiation will be found in the
delivery system. The 'delivery system refers to the arrangements made by which the customer would be
able to (i) access and purchase the service on offer as well as (ii) receive the benefits of the service after
purchase. The former would be the distribution system and the latter would be reflected in the after-
sales service and the claims procedures. These are difficult to copy and replicate, as they are based on
the culture and management practices.

The customers in banks operate savings bank accounts. Peripherals are in speed with which deposits
and cash withdrawals happen, credit for cheques deposited, ability to operate account without going to
the premises of the bank and so on. It might appear that if one bank can do it, so can any other.
Theoretically, this is so. But in practice, it depends on the skills and attitudes of the personnel, as well as
the systems in place. All banks do not issue credit cards.

(b) Product Range – Breadth and Depth

1. While designing and offering a service product, the following factors have to be taken into
account.
 The market segment being catered to.
 The needs that will be satisfied by the core product.
 What should be the mix of the various elements in the product.
 Extent of augmentation.
 Extent of differentiation with other products.
 Extent of customization.
 Availability of technology.
 Arrangements for delivery of the proposed service.

(c) Developing a Product

1. The steps in developing a service product are

 Determine what the customer values as benefit (Benefit concept)
 Determine which of these benefits could be offered (Service concept)
 Decide on the precise Service offer in which includes form and levels of the benefits to be
offered and

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