Note on Service Marketing, Its Nature and Strategies

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Services Marketing

Services have grown rapidly in recent years. Services now account for 75 to 80 percent of the U.S. gross domestic product (GDP). The service industry is still growing. By 2014, it has estimated that nearly four out of five jobs in the US will be in service industries. The service markets are growing even rapidly in the world economy that has made up about 64 percent of the gross world product.

Service market varies greatly. Government offer services through courts, employment service, hospitals, police and fire departments, military services, schools and the postal service. Private not-for-profit organizations offer services via museums, churches, charities, foundations, colleges and hospitals. A huge number of business company offer services— airlines, hotels, banks, insurance companies, medical and legal practices, consulting companies, entertainment and telecommunications companies, real estate firms, retailers, and others.

The Nature and Characteristics of a Service

A firm must consider four special service characteristics while designing marketing program: intangibility, inseparability, variability, and perishability.

Service intangibility refers to those services which could not be seen, felt, tasted, heard, or smelled before they are bought. For example, people undergoing cosmetic surgery could not see the result before the purchase. Airline passengers have nothing but only a ticket and a promise that their luggage and they will reach safely at the intended destination. To reduce uncertainty, the consumer looks for “signals” of service quality. They just draw conclusions about quality from the place, people, price, equipment, and communications that they could see. Thus, the service provider’s work is to make the service tangible in one or more than one ways and send the right signals about quality.

Physical goods are manufactured, then stored, later sold, and still later consumed. But services are first sold and then manufactured and consumed in the same period of time. The service provider is considered as the product in service marketing.

Service inseparability means that the services could not be separated from their providers, whether the providers are machines or people. If a service employee provides the service, then that employee is considered as a part of the service. Because the consumer is also present as the service is produced, provider-customer interaction is one of the special features of services marketing. The provider and the customer both affect the service outcome.

Service variability refers that the quality of services depending on who provides them, when, where, and how they are provided. For example, some hotels—say, Rooftop—have reputations for providing best service than others. Still, within a given Rooftop hotel, one registration-counter employee might be cheerful and efficient, whereas the other standing just a few feet away might be slow and unpleasant. Even the quality of a single Rooftop employee’s service varies according to his or her energy and frame of mind at the time.

Service perishability refers that the services cannot be stored for later sale or use. Some doctors charge patients for missed appointments because the value of service is existed only at that point and disappeared when the patient did not show up. The perishability of services might not be a problem when demand is steady. However, if demand fluctuates, service firms usually have difficult problems. For example, because of rush-hour demand, public transportation firm have to own much more equipment than they would when demand was even throughout the day. Thus, service companies usually design strategies for producing a better match between demand and supply. Hotels and resorts charge low prices in the off-season to attract more customers. And restaurants hire part-time workers to serve during peak periods.

 

 

Marketing Strategies for Service Firms

Just like manufacturing businesses, good service company uses marketing to position themselves strongly in chosen target markets. Service firms establish their positions via traditional marketing mix activities. However, because services differ from the tangible products, they usually require additional marketing approaches.

The Service Profit Chain

The consumer and the front-line service employee interact to generate the service usually in service marketing. Effective interaction depends upon the skills of front-line service employees and on the support processes backing these employees. Hence, successful service firms focus their attention on both their consumer and their employees. They understand the service profit chain, that links service firm profits with employee and customer satisfaction.

Service marketing needs more than just traditional external marketing using the four Ps. Service marketing is also internal marketing and interactive marketing.

Internal marketing means that the service companies must orient and encourage its customer-contact employees and support service people to work as a team for providing customer satisfaction. Marketers should get everyone in the company to be customer centered.

Interactive marketing means that service quality usually depends heavily on the quality of the buyer-seller interaction during the encounter of service. In product marketing, product quality usually depends little on how the product is obtained. But in services marketing, service quality depends on both deliverer of the service and the delivery quality.

Managing Service Differentiation

In recent days of intense price competition, service marketers usually complain about the difficulty of differentiating their services from those of competitors. To the extent that consumers view the services of different providers as similar, they care less about the provider than the price.

Service firms could differentiate their service delivery by having more able and reliable customer-contact people, establishing a superior physical environment in which the service product is delivered, or designing a superior delivery process. For example, most of the grocery chains now offer online shopping and home delivery as a better method to shop. Also, most of the banks allow the customer to access their account information from almost anywhere— from their cell phone to ATM.

 

Managing Service Quality

A service firm could differentiate itself by delivering consistently higher quality than its competitors provide. Many of the service industries have now joined the consumer-driven quality movement. Like product marketers, service providers required identifying what target customers expect in regard to service quality.

Unfortunately, service quality is difficult to define and judge than product quality. For example, it is difficult to agree on the quality of a haircut than on the quality of a hair dryer. Consumer retention is perhaps the best measure of quality; a service company’s ability to be onto its customers depends on how consistently it delivers value to them. Top service firms set high service-quality standards. They watch service performance very closely, both their own and that of competitors. They do not settle for purely good service; they aim for 100 percent defect-free service.

 

Managing Service Productivity

With their costs rising rapidly, service companies are under great pressure in order to increase the service productivity. They can do so in different ways. They could train current workers better or also can hire new ones who will work harder or more skillfully. Also, they can increase the quantity of their service by providing up some quality. The provider could “industrialize the service” with the addition of equipment and standardizing production, as in McDonald’s assembly-line approach to fast food retailing.

However, the firm must avoid pushing productivity so hard that doing so reduces quality. Attempts to industrialize a service or cut costs might make a service firm more efficient in the short run. But that can also reduce its longer-run ability to initiate, maintain service quality, or respond to customer needs and wants. Therefore, in attempting to improve service productivity, the firm must be mindful of how they create and deliver customer value. In short, they must be careful not to take the “service” out of service.

 

Reference

Kotler, P., & Armstrong, G. (2013).Principles of Marketing.Chennai: Pearson India Education Services Pvt Ltd.

http://www.marketingteacher.com/introduction-to-services-marketing/

  • Services have grown rapidly in recent years. Services now account for 75 to 80 percent of the U.S. gross domestic product (GDP). The service industry is still growing. 
  • Service intangibility refers that services could not be seen, felt, tasted, heard, or smelled before they are bought. 
  •  Service variability refers that the quality of services depends on who provides them ,when, where, and how they are provided.

  •  Service perishability refers that the services cannot be stored for later sale or use

  • Just like manufacturing businesses, good service company use marketing to position themselves strongly in chosen target markets. Service firms establish their positions via traditional marketing mix activities.

  • Service variability refers that the quality of services depends on who provides them ,when, where, and how they are provided.

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