Services marketing

From Wikipedia, the free encyclopedia

Services marketing is a sub-field of marketing, which can be split into the two main areas of
goods marketing (which includes the marketing of fast moving consumer goods (FMCG) and
durables) and services marketing. Services marketing typically refers to both business to
consumer (B2C) and business to business (B2B) services, and includes marketing of services
such as telecommunications services, financial services, all types of hospitality services, car
rental services, air travel, health care services and professional services.
Services are (usually) intangible economic activities offered by one party to another. Often timebased, services performed bring about desired results to recipients, objects, or other assets for
which purchasers have responsibility. In exchange for money, time, and effort, service customers
expect value from access to goods, labor, professional skills, facilities, networks, and systems;
but they do not normally take ownership of any of the physical elements involved.[1]
There has been a long academic debate on what makes services different from goods. The
historical perspective in the late-eighteen and early-nineteenth centuries focused on creation and
possession of wealth. Classical economists contended that goods were objects of value over
which ownership rights could be established and exchanged. Ownership implied tangible
possession of an object that had been acquired through purchase, barter or gift from the producer
or previous owner and was legally identifiable as the property of the current owner.
More recently, scholars have found that services are different than goods and that there are
distinct models to understand the marketing of services to customers.[2][3] In particular, scholars
have developed the concept of service-profit-chain to understand how customers and firms
interact with each other in service settings,[4][5][6] Adam Smiths famous book, The Wealth of
Nations, published in Great Britain in 1776, distinguished between the outputs of what he termed
"productive" and "unproductive" labor. The former, he stated, produced goods that could be
stored after production and subsequently exchanged for money or other items of value. But
unproductive labor, however" honorable,...useful, or... necessary" created services that perished
at the time of production and therefore didnt contribute to wealth. Building on this theme,
French economist Jean-Baptiste Say argued that production and consumption were inseparable in
services, coining the term "immaterial products" to describe them.

Alternative View
A recently proposed alternative view is that services involve a form of rental through which
customers can obtain benefits.[7] What customers value and are willing to pay for are desired
experiences and solutions. The term, rent, can be used as a general term to describe payment
made for use of something or access to skills and expertise, facilities or networks (usually for a

defined period of time), instead of buying it outright (which is not even possible in many
instances).[8][9]
There are five broad categories within the non-ownership framework
1. Rented goods services: These services enable customers to obtain the
temporary right to use a physical good that they prefer not to own (e.g.
boats, costumes)
2. Defined space and place rentals: These services obtain use of a defined
portion of a larger space in a building, vehicle or other area which can be an
end in its own right (e.g. storage container in a warehouse) or simply a
means to an end (e.g. table in a restaurant, seat in an aircraft)
3. Labor and expertise rental: People are hired to perform work that customers
either choose not to do for themselves (e.g. cleaning the house) or are unable
to do due to the lack of expertise, tools and skills (e.g. car repairs, surgery)
4. Access to shared physical environments: These environments can be indoors
or outdoors where customers rent the right to share the use of the
environment (e.g. museums, theme parks, gyms, golf courses).
5. Access to and usage of systems and networks: Customers rent the right to
participate in a specified network such as telecommunications, utilities,
banking or insurance, with different fees for varying levels of access

In defining service marketing we can modify the definition of American Marketing Association
on Marketing by adding the following changes. Services Marketing is an organisational function
and a set of process for identifying or creating, communicating, and delivering value to
customers and for managing Customer relationship in a way that benefit the organisation and
stake holders.

Introduction

The world economy nowadays is increasingly characterized as a service economy. This is

primarily due to the increasing importance and share of the service sector in the economies of
most developed and developing countries. In fact, the growth of the service sector has long been
considered as indicative of a countrys economic progress.
Economic history tells us that all developing nations have invariably experienced a shift from
agriculture to industry and then to the service sector as the main stay of the economy.

This shift has also brought about a change in the definition of goods and services themselves. No
longer are goods considered separate from services. Rather, services now increasingly represent
an integral part of the product and this interconnectedness of goods and services is represented
on a goods-services continuum.
Definition and characteristics of Services

The American Marketing Association defines services as - Activities, benefits and satisfactions
which are offered for sale or are provided in connection with the sale of goods.
The defining characteristics of a service are:
Intangibility: Services are intangible and do not have a physical existence. Hence services
cannot be touched, held, tasted or smelt. This is most defining feature of a service and that which
primarily differentiates it from a product. Also, it poses a unique challenge to those engaged in
marketing a service as they need to attach tangible attributes to an otherwise intangible offering.
1. Heterogeneity/Variability: Given the very nature of services, each service
offering is unique and cannot be exactly repeated even by the same service
provider. While products can be mass produced and be homogenous the
same is not true of services. eg: All burgers of a particular flavor at
McDonalds are almost identical. However, the same is not true of the service
rendered by the same counter staff consecutively to two customers.
2. Perishability: Services cannot be stored, saved, returned or resold once
they have been used. Once rendered to a customer the service is completely
consumed and cannot be delivered to another customer. eg: A customer
dissatisfied with the services of a barber cannot return the service of the
haircut that was rendered to him. At the most he may decide not to visit that
particular barber in the future.
3. Inseparability/Simultaneity of production and consumption: This
refers to the fact that services are generated and consumed within the same
time frame. Eg: a haircut is delivered to and consumed by a customer
simultaneously unlike, say, a takeaway burger which the customer may
consume even after a few hours of purchase. Moreover, it is very difficult to
separate a service from the service provider. Eg: the barber is necessarily a
part of the service of a haircut that he is delivering to his customer.
Types of Services
1. Core Services: A service that is the primary purpose of the transaction. Eg:
a haircut or the services of lawyer or teacher.
2. Supplementary Services: Services that are rendered as a corollary to the
sale of a tangible product. Eg: Home delivery options offered by restaurants
above a minimum bill value.

Difference between Goods and Services

Given below are the fundamental differences between physical goods and services:
Goods

Services

A physical commodity

A process or activity

Tangible

Intangible

Homogenous

Heterogeneous

Production and distribution are

separation from their consumption

Production, distribution and consumption

are simultaneous processes

Can be stored

Cannot be stored

Transfer of ownership is possible

Transfer of ownership is not possible

Characteristics Of A Service
There are five characteristics to a service:

Lack of ownership

Intangibility

Inseparability

Perishability

Heterogeneity

Each of these need to be taken into account when marketing a service.

Lack of Ownership
You can not own a service and you can not store a service like you can store a product. Services
are used or hired for a period of time. For example when you buy an aeroplane ticket to fly to the
USA, you are buying a service which will start at the beginning of the flight and finish at the end
of the flight. You can not take the aeroplane flight home with you.
Intangibility
You cannot hold or touch a service unlike a product. This is becuase a service is something
customers experience and experiences are not physical products.
Inseparability

Services cannot be separated from service providers. A product can be taken away from the
producer but a service can not be taken away as it involves the service provider or its
representatives doing something for the customer. For example a company selling ironing
services needs the company to iron the clothes for you.
Perishability
Services last a specific time and cannot be stored like a product for later use. For example an
interior designer will design a property once. If you would like to redesign the house you will
need to purchase the service again.
Heterogeneity

Firms have systems and procedures to ensure that they provide a consistent service but it is very
difficult to make each service experience identical. For example two identical plane journeys
may feel different to the passengers due to circumstances beyond the airline's control such as
weather conditions or other passengers on the plane.
SERVICE MARKETING MIX (Extended Marketing Mix)

Introduction
In the previous article we discussed the characteristics of a service. In this article we look at how
the marketing mix for marketing a service is different to the marketing mix for products. Just like
the marketing mix of a product the service marketing mix comprises of Product, Price, Place
and Promotion. How ever as a service is not tangible the marketing mix for a service has three
additional elements: People, Process and Physical Evidence.

People

People are an essential ingredient in service provision; recruiting and training the right staff is
required to create a competitive advantage. Customers make judgments about service provision
and delivery based on the people representing your organisation. This is because people are one
of the few elements of the service that customers can see and interact with. The praise received
by the volunteers (games makers) for the London 2012 Olympics and Paralympics demonstrates
the powerful effect people can create during service delivery.
Staff require appropriate interpersonal skills, aptititude, and service knowledge in order to
deliver a quality service. In the UK many organisations apply for the "Investors in People"
Accreditation to demonstrate that they train their staff to prescribed standards and best practices.
Process
This element of the marketing mix looks at the systems used to deliver the service. Imagine you
walk into Burger King and order a Whopper Meal and you get it delivered within 2 minutes.
What was the process that allowed you to obtain an efficient service delivery? Banks that send
out Credit Cards automatically when their customers old one has expired again require an
efficient process to identify expiry dates and renewal. An efficient service that replaces old credit
cards will foster consumer loyalty and confidence in the company. All services need to be
underpinned by clearly defined and efficient processes. This will avoid confusion and promote a
consistent service. In other words processes mean that everybody knows what to do and how to
do it.

Physical Evidence (Physical Environment)

Physical evidence is about where the service is being delivered from. It is particularly relevant to
retailers operating out of shops. This element of the marketing mix will distinguish a company
from its competitors. Physical evidence can be used to charge a premium price for a service and
establish a positive experience. For example all hotels provide a bed to sleep on but one of the
things affecting the price charged, is the condition of the room (physical evidence) holding the
bed. Customers will make judgments about the organisation based on the physical evidence. For
example if you walk into a restaurant you expect a clean and friendly environment, if the
restaurant is smelly or dirty, customers are likely to walk out. This is before they have even
received the service.
Summary

The Service Marketing Mix involves Product, Price, Place, Promotion, People, Process and
Physical Evidence. Firms marketing a service need to get each of these elements correct. The
marketing mix for a service has additional elements because the characteristics of a service are
different to the characteristics of a product. The Characteristics of a service are:
(1) Lack of ownership
(2) Intangibility
(3) Inseparability
(4) Perishability
(5) Heterogeneity.
To certain extent managing services are more complicated then managing products, products can
be standardised, to standardise a service is more difficult as there it can be affected by factors
outside the service providers control.

Types of Services

Services can be divided in several ways. Some of the most common are discussed here, and
clarified with examples.
The service sector can be divided in many ways. Here some common divisions will be briefly
discussed based on:

The nature of the service providing process,

The subject of the service,

The nature and function of the service, and

The company class.

Nature of the Service Providing Process

Service providing services can be divided based on the complexity and rate of tailoring.
Complexity means the number of successive steps that need to be taken and the rate of tailoring
means the rate at which specific client needs are fulfilled. Based on these two components, four
types of service can be discerned:

Simple standard (example: gas station)

Complex standard (example: company security)

Simple tailored (example: babysit service)

Complex tailored (example: software development)

Subject of the Service

Services can generally be used to elicit changes in the condition of people, possession or
information. Based on this three types of services are:

People processing: the client has to be physically present (example: public

transportation).

Possession processing: here, one of the clients possession is the subject of the service
(example: cleaning service).

Information processing: this is the fastest growing service type, and the most immaterial
one (example: consultancy).

Nature and Function of the Service

Based on the nature and function of different services, the following division can be made:

Knowledge and skill services: here, delivering knowledge and skill is the primary activity.
These services are most often offered by specialists (example: consultancy or surgery).

Outsourced services: this sort of services takes over certain activities that the client could
have done himself, but for economical, technical or emotional reasons these tasks are not
performed by the client (example: maintenance).

Facilitating services: these services mainly make a facility available, mostly at large scale
(example: recording studios).

Company Class
Lastly, the commercial service sector can be divided based on company class, which results in
five groups of services:

Tourist and recreational services: these services, aimed at the spare time of potential
clients, are people oriented and relatively immaterial (example: hotels, restaurants and
bars).

Personal services: specifically aimed at the caring for people (example: hairdressers and
beauty institutes).

Maintenance services: relatively strongly focused on objects and companies and fairly
material (example: cleaning services).

Delivering services: mainly focused on companies (example: insurance companies).

Distributive services: these services complete the function of transporting and distributing
goods, people and information. This type of service constitutes the delivered service of
over half of the service providers (example: all transport services and communication
companies).

A sampling of some types of Service Businesses

Accounting Services
Advertising Services
Auto Services
Building Services
Boat Services
Bridal Services
Business Services
Car Rental Agencies
Catering Services
Childrens Services

Message Therapist
Moving Services
Painting Services
Personal-Care Services
Personal Chef
Pest Control Services
Pet-Care Services
Photography Services
Plant Maintenance Services
Plumbing Services

Check-Cashing Services
Cleaning Services
Check-Cashing Services
Consulting Services
Contractor Services
Copywriting & Proof Services
Cover Letter/Resume Services
Dating Services
Decorating Services
Designing Services
DJ Businesses
Dry Cleaning & Laundry Services
Dry Cleaning Delivery
Editorial Services
Educational Services
Electrical Services
Employment Services
Environmental Services
Errand Services
Event Planning
Eye-Care Centers
Financial Services
Fitness Centers
Hair Salons
Handyman Services
Health-Care Services
Home-Improvement Services
Lawn Care & Landscaping
Limousine Services
Maintenance Services

Pool Services
Postal & Business Centers
Printing Services
Private Investigation
Property Inspection
Property Management Services
Publishing Services
Real Estate Services
Recreational Services
Referral Services
Remodeling/Renovation Services
Repair Services
Security Services
Senior Care Services
Shipping Services
Shoe Repair
Sign Stores
Staffing Services
Tanning Services
Tax Services
Tech Services
Travel Agencies
Training Businesses
Tutoring Services
Videotaping Services
Web-Site Services
Wedding Services
Weight-Control Centers
Miscellaneous Services