1. Team 4 Services & Sales SERVICE & SALES 8 P’s of Service Marketing 28.02.2010

2. Team 4 Services & Sales Marketing can be viewed as:  A strategic and competitive thrust pursued by top management.  A set of functional activities performed by line managers.  A customer-driven orientation for the entire organization. Marketing is the only function to bring operating revenues into a business; all other functions are cost centers. The “8Ps” of Services Marketing are needed to create viable strategies for meeting customer needs profitably in a competitive marketplace. Introduction

3. Team 4 Services & Sales Mercadona is a distribution company operating in the supermarket segment. It is backed by 100% Spanish capital and its CEO is Juan Roig. Nationally, it is present in 46 provinces in 15 autonomous communities with a network of 1,266 supermarkets. Its facilities and customers are attended by more than 62,000 individuals throughout the different stages of the process, 100% of which have permanent job positions. Its supermarkets have an average of 1,300 square metres of retail floor space and are based on a model of urban commerce that is close at hand with an ample selection in fresh and dry groceries, beauty and household supplies as well as pet food. Introduction

4. Team 4 Services & Sales In 2008, Mercadona achieved a turnover of 13,986 billion euros, what means the 1,4% of the GDP (PIB) in Spain. Introduction

5. Team 4 Services & Sales 1.Product Elements 2.Place and Time 3.Price and Other User Outlays 4.Promotion and Education 5.Process 6.Physical Environment 7.People 8.Productivity and Quality 8 P’s of Service Marketing

6. Team 4 Services & Sales Embrace all aspects of service performance that create value Core product responds to customer’s primary need Array of supplementary service elements  Help customer use core product effectively  Add value through useful enhancements Planning marketing mix begins with creating a service concept that:  Will offer value to target customers  Satisfy their needs better than competing alternatives P1. Product Elements 8 P’s of Service Marketing

7. Team 4 Services & Sales OWN BRAND - WHITE LABEL PRODUCT:  Company of alimentation, MERCADONA propose more than 9.200 products, many of them dedicate only to MERCADONA (clavo, bonka, don simon...)  A white label product is a product produced by one company (the producer) that other companies (the marketers) rebrand to make it appear as if they made it.  "Mercadona buys from a manufacturer in bulk and puts its own name on the product : HACENDADO / BOSQUE VERDE / DELIPLUS"  "It gives Mercadona:More freedom and flexibility in pricingMore control over product attributes and qualityHigher margins (or lower selling price)Eliminates much of the manufacturer's promotional costs“ P1. Product Elements 8 P’s of Service Marketing

8. Team 4 Services & Sales Marketing can be viewed as: Delivery decisions: Where, When, How Geographic locations served Service schedules Physical channels Electronic channels Customer control and convenience Channel partners/intermediaries P2. Place & Time 8 P’s of Service Marketing

9. Team 4 Services & Sales Marketing can be viewed as: OWN DISTRIBUTION CHANNEL  1.474.775 m² of sale surface, and 12.1% of the share of market  Presence in 46 cities.  1.137 supermarkets in 46 provinces.  Once the product is bought from the manufacturer, it is stored in the Mercadona logistics centres, which subsequently distribute the product among the shops by its own distribution channel.  Mercadona gives the customer freedom and convenience, because the customers can buy what they want when they want it, all in the same place and always with savings P2. Place & Time 8 P’s of Service Marketing

10. Team 4 Services & Sales Marketing can be viewed as: TOTALLER STRATEGY  Mercadona offers their clients all the product in order enable them to do the "global shopping"  Mercadona offers an ample selection in fresh and dry groceries, beauty and household supplies as well as pet food P2. Place & Time 8 P’s of Service Marketing

11. Team 4 Services & Sales Marketing can be viewed as: SERVICES FRESH BAKED BREAD HOME DELIVERY SERVICE TELEPHONE ORDERS ONLINE SHOPPING P2. Place & Time 8 P’s of Service Marketing

12. Team 4 Services & Sales Marketing can be viewed as: Marketers must recognize that customer outlays involve more than price paid to seller Traditional pricing tasks:  Selling price, discounts, premiums  Margins for intermediaries (if any)  Credit terms Identify and minimize other costs incurred by users:  Additional monetary costs associated with service usage (e.g., travel to service location, parking, phone, babysitting, etc.)  Time expenditures, especially waiting  Unwanted mental and physical effort  Negative sensory experiences P3. Price and Other User Outlays 8 P’s of Service Marketing

13. Team 4 Services & Sales Marketing can be viewed as: A.L.P. (ALWAYS LOW PRICES)  The commercial strategy that the company has been developing since 1993 is called A.L.P. (Always Low Prices).  Buying from a manufacturer in bulk enables Mercadona to have a lower selling price  With ALP, the customers receive genuine savings because all of Mercadona products are ALWAYS AT LOW PRICES. P3. Price and Other User Outlays 8 P’s of Service Marketing

14. Team 4 Services & Sales Marketing can be viewed as: Informing, educating, persuading, reminding customers Marketing communication tools  Media elements (print, broadcast, outdoor, retail, the Internet, etc.)  Personal selling, customer service  Sales promotion  Publicity/PR Imagery and recognition  Branding  Corporate design Content  Information, advice  Persuasive messages  Customer education/training P4. Promotion & Education 8 P’s of Service Marketing

15. Team 4 Services & Sales Marketing can be viewed as: LIMITED ADVERTISEMENT INVESTMENT  Total quality, liberty of selecion, variety.Services after sales ( atencion al cliente SAC ) : more than 1 milon of consultation  The main ways of communication are to build the Mercadona´s company image (quality, prices, sutervices) and get spread by the word of mouth of the customers  To a certain extent, White Label products take advantage of the name-brand as a reminder, due to the fact that when the customer see a name-brand product, they think in the equivalent white label product P4. Promotion & Education 8 P’s of Service Marketing

16. Team 4 Services & Sales Marketing can be viewed as: How firm does things may be as important as what it does Customers often actively involved in processes, especially when acting as co-producers of service Process involves choices of method and sequence in service creation and delivery  Design of activity flows  Number and sequence of actions for customers  Nature of customer involvement  Role of contact personnel  Role of technology, degree of automation Badly designed processes waste time, create poor experiences, and disappoint customers P5. Process 8 P’s of Service Marketing

17. Team 4 Services & Sales Marketing can be viewed as: WHY MERCADONA CAN OFFER ALP?  Because Mercadona buy products directly from the source.  Because Mercadona set up long-term agreements with manufacturers, which lets them offer their customers high-quality products at prices that are extremely low and stable. LOGISTICS NETWORK  More than 2000 suppliers, 800 millons euros invest.  Mercadona can guarantee the efficiency of the supply chain with its logistics centres in Spain as:  Ingenio centre in Gran Canaria, Riba-Roja de Túria (Valencia), Antequera (Málaga), Sant Sadurní de Anoia (Barcelona), San Isidro (Alicante), Huévar (Sevilla), Granadilla de Abona (Tenerife) and Ciempozuelos (Madrid), Villadangos del Pbuiltáramo (León), Guadix (Granada) and Pla-Za (Zaragoza). P5. Process 8 P’s of Service Marketing

18. Team 4 Services & Sales Marketing can be viewed as: Design servicescape and provide tangible evidence of service performances Create and maintain physical appearances  Buildings/landscaping  Interior design/furnishings  Vehicles/equipment  Staff grooming/clothing  Sounds and smells  Other tangibles Manage physical cues carefully— can have profound impact on customer impressions P6. Physical Environment 8 P’s of Service Marketing

19. Team 4 Services & Sales Marketing can be viewed as: "ENVIRONMENTS"  Supermarket sections laid out in “environments”  Customers can buy what they want when they want it, all in the same place  Spacious and modern facilities with a full range of services so that the shopping can be as convenient as possible  Butcher´s Shop replacement with modern counters of meat  8 Blocs Logistics and funcionement  3 Blocs of logistics project and execusion: Granada, Leon and Zaragoza. P6. Physical Environment 8 P’s of Service Marketing

20. Team 4 Services & Sales Marketing can be viewed as: SERVICES CUSTOMER PARKING BAG LOCKERS CLIMATE CONTROL BANK CARDS P6. Physical Environment 8 P’s of Service Marketing

21. Team 4 Services & Sales Marketing can be viewed as: Interactions between customers and contact personnel strongly influence customer perceptions of service quality The right customer-contact employees performing tasks well  Job design  Recruiting  Training  Motivation The right customers for firm’s mission  Contribute positively to experience of other customers  Possess—or can be trained to have— needed skills (co- production)  Can shape customer roles and manage customer behavior P7. People 8 P’s of Service Marketing

22. Team 4 Services & Sales Marketing can be viewed as: SERVICES DATA  3.700 workers, investement of about 72 million of euros for the formacion (1.200 e by workers). Bonus if the companie reach his objectives : 160 millions, share between all the workers. "THE BOSS"  MERCADONA implemented its TOTAL QUALITY approach in 1993. This decision prompted the company to rearrange its priorities as follows: Customers, otherwise known internally as the "Boss", Workers, Suppliers, the Company and Capital.  The TOTAL QUALITY model has led Mercadona to regard Workers as their second priority. An example of this is that 100% of the more than 62.000 individuals that form a part of the organisation are permanent. P7. People 8 P’s of Service Marketing

23. Team 4 Services & Sales Marketing can be viewed as:  It also bears mentioning that workers are paid 100% of their salary in the event of occupational disability, and that their minimum salaries are higher than the average paid in the sector.  The more than 62.000 individuals that make up the company receive TOTAL QUALITY training, with each worker enrolling in specific courses of 70 hours/year, among others.  Training of the personnel in butcher´s shops: Transformation of the Butcher in a customer advisor  Reply complaints is an obligation for the employees. A complaint is understood as an oportunity. FREE CUSTOMER SERVICE LINE P7. People 8 P’s of Service Marketing

24. Team 4 Services & Sales Marketing can be viewed as: Productivity and quality must work hand in hand Improving productivity key to reducing costs Improving and maintaining quality essential for building customer satisfaction and loyalty Ideally, strategies should be sought to improve both productivity and quality simultaneously—technology often the key  Technology-based innovations have potential to create high payoffs  But, must be user friendly and deliver valued customer benefits P8. Productivity and Quality 8 P’s of Service Marketing

25. Team 4 Services & Sales PRODUCTIVITY DATA  Contribution to the spanish PIB : 2.516 million euros.  Investment to the "green policy" (medio-ambiantal) : 17 millions.  EBITDA: 336 mil (+39%)  Productivity: 220 000€ MAXIMUM QUALITY  MERCADONA guarantees their clients the Maximm Quality of its products at the moment of purchase and at the moment of consumption  MERCADONA is making efforts to ensure intrinsic product quality through its Life Principle strategy.  MERCADONA buys their products directly from the source, without go-betweens. P8. Productivity and Quality 8 P’s of Service Marketing

26. Team 4 Services & Sales  MERCADONA schedule our purchases, which cuts down on transport and storage times, with products being kept at their optimal temperature.  MERCADONA select the finest quality and make sure that products arrive to the customers in the least time possible and with the maximum freshness.  All of MERCADONA´s products are subject to rigorous quality controls in order to ensure that they are maintained in perfect conditions of hygiene and freshness.  MERCADONA has their own exclusive brands that are supplied by the leading manufactures, whose products are checked and guaranteed to sell them in the finest conditions.  Productivity and quality must work hand in hand  Improving productivity key to reducing costs P8. Productivity and Quality 8 P’s of Service Marketing

27. Team 4 Services & Sales  Improving and maintaining quality essential for building customer satisfaction and loyalty  Ideally, strategies should be sought to improve both productivity and quality simultaneously—technology often the key P8. Productivity and Quality 8 P’s of Service Marketing