WHAT'S DIFFERENT ABOUT SERVICES MARKETING?

Carolyn R. Fryar A number of fundamental marketing principles differentiate marketing a service from marketing a physical product. These differences affect marketing as well as communications, both in the perception of quality, and in positioning or competitive difference. We will consider here, first, what these differences are and how they can affect your company. Then I will analyze the components of a communications plan that can help your marketing communications be more effective.

Differences Between Marketing a Service and Marketing a Product

Competitive positioning with both services and products is the key to success in today's marketplace. It has been said that success depends on a marketer's ability to clearly differentiate the product or service from its competition in a way that is meaningful to the customer. For example, a well-communicated point of difference can cause one product or

Carolyn R. Fryar is senior vice president and general manager, Metro Markets division of Kelly Temporary Services, a division of Kelly Services, the nations' largest temporary help company. She is responsible for overseeing the operation of all Kelly Temporary Services' offices in major metropolitan cities throughout North America. Fryar joined Kelly in 1972 as an account representative in the Seattle district. In 1976, she was promoted to branch manager of the Minneapolis office. In 1978, she was named regional manager of the Newark office and in 1981 was promoted to vice president and group director of Branch Operations at the company's headquarters. In 1991 she was named to her present position. Ms. Fryar holds a bachelor's degree from the University of Oklahoma and an MBA from Seattle University. This article was adapted from a speech given at the annual marketing conference of The Conference Board.

Vol. 5 No 4 Fall 1991

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service to be worth full price while competitors are forced to discount. Communications must play a key role in selling and promoting this difference in the perception of the customer. P r o d u c t s are p r o d u c e d prior to consumption and can be stored and inventoried. W h e n a c u s t o m e r b u y s a physical p r o d u c t , however, that customer is also purchasing a service. The marketing textbooks call this phenomenon "co-production." The most important marketing question a company must answer is "What business are we in?" Many marketers dismiss this issue as unimportant, assuming that if we make bread, we are in the bread business. Defining your business, however, can lead to surprising success. The most popular example is McDonalds.

sales and inventory replacement could still spread the manufacturing and delivery throughout the week. A marketer of a service, however, must be careful that the service workers are not overworked one day a week and idle the others. A services marketer h a s to appeal to a broad segment of constituents. The b e s t e x a m p l e of t h i s p r o b l e m w a s P e o p l e Express airline. Its marketing people defined its business as "clearly positioned as different from its c o m p e t i t i o n , clearly p o s i t i o n e d to appeal to the discretionary traveler." The trouble was that it was too specifically segmented. Its planes were almost empty during the middle of the week, because few business people wanted to fly with all the backpackers. The company had such an uneven utilization on its resources that it was forced out of business. Thus, a product marketer can segment b e t w e e n b r a n d s , having one b r a n d for each s e g m e n t of t h e p o p u l a t i o n . For e x a m p l e , Procter & Gamble makes six different detergents, each with a different brand name, each with its own built-in segmentation, each carefully positioned as different in some way. A services marketer, on the other hand, cannot do that without ending up like People Express. One brand name must provide a full range of services and appeal to enough segments to fill the capacity during all days of the week. How can you position a branded service as different from competition if you must service multiple segments of the market? Services run a dangerous risk of being perceived as a commodity. One airplane seat is like another, one lawyer is as good as the next, all doctors today are equally unwilling to make housecalls. To appeal to different segments of the population, a services marketer must sell multiple products u n d e r the same company or brand name to different segments of the constituency. Doing that takes a very skillful balancing act. A services marketer must learn to live with the increasing segmentation and changes in the market by expanding and being flexible within h i s or h e r c o m p a n y a n d b r a n d s . In o t h e r words, to appeal to a full range of constituents,

The unique version of quality permeates everything one does and communicates.
McDonalds is not in the hamburger business. Its hamburgers are actually not very different from those of the competition. McDonalds is in the service business: "...you deserve a break today, ...we do it all for you..." McDonalds' competitors seem to dismiss the service mark e t i n g a n d a t t a c k on t h e p r o d u c t l e v e l : "...where's the beef..." or "...Flame-broiled versus fried..." As long as McDonalds holds its position during these "burger wars" and does not react hamburger for hamburger, those competitive wars usually do very little to damage McDonalds. Another good example is Federal Express. It started in the freight forwarding business, but totally redefined its business and started a new category. The company answered the question, "What b u s i n e s s are we i n ? " It was not just freight forwarding. Then there's Domino's, where for many customers the delivery is more important than the pizza. Most successful products have built-in features that both target and segment them. Even if one specific product is "positioned" to be, for instance, consumed only on Tuesday,

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WHAT'S DIFFERENT ABOUT SERVICES MARKETING? one must offer all segmented appeals within one brand. T h e situation can be even more c o m p l e x than that. When choosing between two cans of vegetable soup, a consumer can stand in the supermarket isle with one brand in each hand and compare the ingredients, weight, and so on. The definition of "quality" becomes tangible, or at least a product marketer can enhance the p e r c e p t i o n of quality t h r o u g h p h y s i c a l clues. Procter & Gamble puts "blue beads" in one of its detergents-chemically no different from the white components, but an effective way to enhance the perception of extra cleaning power.

service employees at the time of consumption. That means that quality control works very differently w i t h p r o d u c t s a n d w i t h s e r v i c e s . Someone w h o sells services cannot stand at the end of the assembly line and test samples for quality. The maid who folds the ends of the toilet tissue must be trained to do this, but cannot be supervised during execution. Again, McDonalds is doing it right. They realize that, to convey the image of efficiency, nothing is more destructive than to see two clerks leaning on the counter chatting about last night's date or game, so employees are trained to always look busy. So McDonalds "choreographs" its service workers always to look busy when they are in the view of the customer, because efficiency is an important part of the planned image. Because service choreography is an important form of communication, most successful service marketers make the training of the customer contact employees part of the marketing function. People contacts is the most important aspect of marketing a service. It has been said that the difference between a service company and a product company is simply that in a service company, the lower paid an employee is, the more contact he or she has with the customer, whereas, in a product company, only a few of the top employees have contact w i t h the customer. Therefore, those w h o are marketing a product aren't as concerned with training. The important aspect of marketing is the contact between the customer and the product.

Most successful p r o d u c t s h a v e builtin features that both target and segment them.
In a service, however, there often is no physical product into which to put "blue beads." As a matter of fact, one of the problems of designing a marketing approach for a service is that it is difficult for the customer to perceive the difference in quality among competitors. For instance, it is difficult to make an objective comparison when buying an airline ticket. It is hard to know what kind of quality one might have gotten if the other service had been purchased instead. But this very fact that the perception of quality is intangible to the purchaser makes it more important to provide "blue beads" and to create your own version of quality. How can a marketer apply that principle? Some m a r k e t e r s are d o i n g so. W h e n the hotel maid is trained to fold the corners of the roll of toilet tissue for the next guest, it is a "blue bead," a reminder that an intangible q u a l i t y service h a s b e e n p r o v i d e d just for that guest.

Ongoing Relationships with Customers

If you were to see a Crest Toothpaste user with a tube of Colgate in his or her shopping basket, you could be sure of one thing: this is a dissatisfied customer. Because p r o d u c t s , especially segmented products, are sold one at a time, customers w h o switch are disloyal. T h e i r p e r s o n a l r e l a t i o n s h i p w i t h Crest Toothpaste is likely to be interrupted by their " t r i a l " of Colgate. Most services, however, work differently. If a loyal American Airlines

Customer Contact
A service, by definition, involves people in the delivery of the service. A portion of what the customer pays for is manufactured by the

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user were seen on a Delta flight, all one could conclude is that maybe the American flight was filled or left at an inconvenient time. In other words, the relationship between American and its loyal traveler was not likely to be interrupted by having to fly Delta that one trip. The relationship between a service marketer and the customer tends to be a continuous one.

labor costs. They were a way to provide customers with 24-hour access to their account w i t h o u t h a v i n g to pay for 2 4 - h o u r h u m a n tellers. There was a lot of apprehension. What kind of customer contact was this impersonal machine going to make? Would it alienate the customer? But a funny t h i n g h a p p e n e d . M a n y c u s tomers preferred the machine over the human teller. Many customers who disliked having to stand in line for a h u m a n teller, who became irked when the teller got a phone call or, for some other reason, was delayed in the middle of a transaction, turned out to be much more forgiving with the automated teller machine. If the transaction got aborted, they were likely to blame themselves, saying: "I was never very good with machines!" and they would patiently try again. This relationship was such a surprise that several interesting books have b e e n written about it. T h e p s y c h o l o g i s t s ' c o n c l u s i o n is rather c u r i o u s : they said it was a matter of involvement. You are punching numbers into a teller machine, you are personally involved in the transaction. Therefore, you are much more tolerant. But w h e n you are a powerless customer in a line depending on a human clerk, you are not involved and are, therefore, more likely to be hostile and resentful.

One brand name must provide a full range of services and a p p e a l to enough segments to fill the capacity during all days of the week.
That situation has both advantages and problems. A manufacturer of a product, such as Tide detergent, can reformulate and change the product and communicate that change quite easily. All the company has to do is print "new & improved" across the box and it may regain the customer who was about to be lured by the latest innovation from some other brand. A services marketer, however, cannot do that so easily. How does one tell loyal customers that their bank's service is "new & improved?" How does one regain customers who are about to be lured by competition? A services marketer who really believes that the relationship with the customer is a continuous one does not think in terms of "regaining." A good analogy is marriage. How does someo n e m a k e an o n g o i n g m a r r i a g e " n e w & improved?" By doing something unexpected. By bringing a gift home on a Wednesday afternoon. By sending a card. In other words, by renewing and refreshing the relationship from time to time, to keep it as personal as possible. This is why good services marketers are such heavy users of direct mail: customers like to hear from their old friend. It is a good way to personalize the service relationship. There is more that can be done, however. Let's consider one of the greatest marketing surprises of the decade. When banks installed automatic teller machines, the main purpose was to save on

To appeal to a full range of constituents, one must offer all segmented appeals within one brand.
Many services marketers have adopted this finding. National Car Rental has recently introduced self-service rental facilities. American Airlines is experimenting with it system-wide for making reservations. AT&T now designs its commercial units so the customer can program them himself, without having to call a service employee. Many banks facilities offer direct access to accounts. Most of these trends are not just labor-saving devices, although that may be an additional benefit. The secret to a satisfied customer is an involved customer.

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Inventory Capability
One difference between products and services has to do with storage. Physical products can be stored and put into inventory. They can be c o n s u m e d on Tuesday even if they were manufactured last week or last month. A s e r v i c e , h o w e v e r , c a n n o t be p u t i n t o inventory. There is no way to recover money from a service that went unsold yesterday. An empty airline seat can never be sold after the plane leaves. An unused hour of a lawyer cannot be sold the next day. A service marketer has the most perishable form of inventory.

The very fact that the perception of quality is intangible to the purchaser makes it more important to provide and create your own vision of quality.
Because the risk of being perceived as a comm o d i t y is m u c h greater for a service, it is incumbent on the marketer to fight that risk and have a unique vision of what they do better than the competition. The unique vision of quality permeates everything one does and communicates. Service companies must sell multiple products u n d e r the same brand name. Therefore, their communications program m u s t distinguish their products from those of the competition. From a communications standpoint, this is probably the most difficult challenge. Since the customer cannot identify quality objectively, a good communications program will show the customer what to expect. It will "rehearse the service experience" so that the customer comes to the transaction fully prepared. Part of that 'rehearsal' will highlight the clues, the "blue beads" that have been choreographed into the service. A n o t h e r fact of selling services is h e a v y r e l i a n c e on p e r s o n a l c o n t a c t w i t h s e r v i c e employees. Therefore, a company must use its communications program to establish a "role model" for its employees. The service workers must know what is expected of them. How can they ensure that the customers know their service is better than that of competitors? Many managers forget this point. At annual p e p rallies, they say, "We are going to be a leader in our market segment!" But they forget that a person behind a counter or answering the p h o n e gets very little coaching from the pronouncement. How does a "market leader" answer the phone? What can one do differently behind the counter? How can one know how to provide a better service than the competition? The communications program must play an

A Communications Program for Marketing Services

B e c a u s e of t h e differences in m a r k e t i n g fundamentals, selling a service is a very different task than selling a physical product. W h a t i m p a c t do these differences h a v e on designing a c o m m u n i c a t i o n s program for a service marketer? First, because the customer pays for both a p r e - p r o d u c e d p r o d u c t and a " c o - p r o d u c e d " human service delivery, the services marketer must explain both parts in the communication program.

Most successful service marketers make the training of the customer contact employees part of the marketing function.
The definition of what a service marketer sells is not always built-in, and so service companies m u s t be extremely careful to clearly define the b u s i n e s s they are in. This is the most important step in a marketing program, as was seen w i t h the M c D o n a l d s and Federal Express examples but, unfortunately, it is the one marketers pay least attention to. Marketers often seem to enjoy the price competition that goes hand in hand with the customers perception that all services are basically much alike.

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important role in keeping the ongoing relationship fresh and personalized. There should be a continuous stream of information to consumers about what is new. Airlines do a very good job of that with their frequent fliers. Other services use direct mailings.

The secret to a satisfied customer is an involved customer.

Those customers who become so involved that they speak of the service in personal terms, as "his or her" company, will be loyal enough to pay top dollar for that service.

Finally, the fact that a service marketer cannot sell from inventory makes it much more important for marketing and communications people to provide tactical programs so that demand and supply match each other at all times. Well-planned tactical programs can at the same time provide a good stream of "news" about a company. Here, too, direct marketing is proving to many service companies that their current customers are their best prospects. In summary, services managers must understand the fundamental difference between the skills and tools required for marketing a service and those for marketing a physical product.

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