Introduction to Services Marketing

Services Marketing

What is services marketing?

A service is the action of doing something for someone or something. It is largely intangible (i.e. not material). You cannot touch it. You cannot see it. You cannot taste it. You cannot hear it. You cannot feel it. So a service context creates its own series of challenges for the marketing manager since he or she must communicate the benefits of a service by drawing parallels with imagery and ideas that are more tangible.

Search quality is the perception in the mind of the consumer of the quality of the product prior to purchase through making a series of searches. So this is simple in relation to a tangible product because you might look at size or colour for example. Therefore search quality relates more to products
and services.

Experience quality is easier to assess. In terms of service you need to taste the food or experience the service level. Therefore your experiences allow you to evaluate the level and nature of the service. You remember a great vacation because of the food or service, but by the same token you remember an awful vacation because of the hopeless food or poor service.

Credence quality is based upon the credibility of the service that you undertake. This is down to the reputation of a dentist or of a decorator. Credence is used where you have little knowledge of the topic and where you rely upon the professionalism of the expert.

Perishable

Perishable – in that once it has occurred it cannot be repeated in exactly the same way. For example, once a 100 meters Olympic final has been run, there will not be another for 4 more years, and even then it will be staged in a different place with many different finalists. You cannot put service in the warehouse, or store in your inventory. An interesting argument about perishability goes like this, once a flight has taken off you cannot sell that seat again, hence the airline makes no profit on that seat. Therefore the airline has no choice but to price at peak when it sells a seat at busy times in order to make a profit. That’s why restaurants offer vouchers to compensate for quieter times, and it is the same for railway tickets and matinees in Broadway during the middle of the week.

Variable

Variability- since the human involvement in service provision means that no two services will be completely identical, they are variable. For example, returning to the same garage time and time again for a service on your car might see different levels of customer satisfaction, or speediness of work. If you watch your favourite/favorite music group on DVD the experience will be the same every time you play it, although if you go to see them on tour when they are live no two performances will be identical for a whole variety of reasons. Even with the greatly standardized McDonalds experience, there are slight changes in service, often through no fault of the business itself. Sometimes Saturday lunchtime will be extremely busy, on other days you may have to wait to go via the drive through. So services tend to vary from one user experience to another.

Homogeneous

Homogeneity is where services are largely the same (the opposite of variability above). We considered McDonald’s above which is a largely homogeneous service, so now let’s look at KFC and Pizza Hut. Both of these businesses provide a homogeneous service experience whether you are in New York, or Alaska, or even Adelaide. Consumers expect the same level of service and would not anticipate any huge deviation in their experience. Outside of the main brands you might expect a less homogeneous experience. If you visit your doctor he or she might give one interpretation, whereas another doctor might offer a different view. Your regular hairdresser will deliver a style whereas a hairdresser in the next town could potentially style your hair differently. Therefore standardization is largely embodied by the large global brands which produce services.

Right of ownership is not taken to the service, since you merely experience it. For example, an engineer may service your air-conditioning, but you do not own the service, the engineer or his equipment. You cannot sell it on once it has been consumed, and do not take ownership of it.

Western economies have seen deterioration in their traditional manufacturing industries, and a growth in their service economies. Therefore the marketing mix has seen extended and adapted to create the services marketing mix, also known as the 7P’s or the extended marketing mix – physical evidence, process and people.

A product is tangible (i.e. material) since you can touch it or own it. A service tends to be an experience that is consumed at the point where it is purchased and cannot be owned since it quickly perishes. A person could go to a café one day and enjoy excellent service, and then return the next day and have a poor experience. Marketers talk about the nature of a service as being inseparable, intangible, perishable, homogenous and variable.

Inseparable

Inseparable – from the point where it is consumed, and from the provider of the service. For example, you cannot take a live theatre performance home to consume it (a DVD of the same performance would be a product, not a service). The consumer is actually involved in the production process that they are buying at the same time as it is being produced, for example an eye test or a makeover. One benefit would be that if you are unhappy with you makeover you can tell the beautician and that instant feedback means that the service quality is improved. You can’t do that with a product. Another attribute is that services have to be close to the person consuming them i.e. goods can be made in a central factory location which has the benefits of mass production. This localization means that consumption is inseparable from production.

Intangible

Intangible – cannot have a real, physical presence as does a product. For example, motor insurance may have a certificate, but the financial service itself cannot be touched i.e. it is intangible. This makes it tricky to evaluate the quality of service prior to consuming it since there are fewer attributes of quality in comparison to a product. One way is to consider quality in terms of search, experience and credence.

Services Marketing Mix

Services Marketing Mix

As we discussed in the lesson on services, there are a series of fundamental characteristics such as intangibility, inseparability, heterogeneity and perishability which are unique to a service. The traditional marketing mix which includes product, place, price and promotion could be stretched to compensate for these factors. However the services marketing mix is an adaptation of the traditional 4Ps to address these characteristics and it sees the addition of another 3Ps which are physical evidence, process and people. We will also consider how the traditional mix alters for a service with sections below on pricing for services, product for services, place for services, and promotion for services.



Of course the marketing mix for services still needs to address the remaining 4Ps of pricing, product, place and promotion. Let’s consider some examples of these four elements from the perspective of a service.

Pricing for services

Pricing needs to take into account two factors in relation to services. The first issue is what is the unit which we are pricing? Do we sell a hotel room based on its area or upon how long you use it for? Would you cost dental surgery by the amount of time you sat in the dentist’s chair or by the actual procedure that was undertaken? Secondly if a price is based upon a bundle of sub services then how do you price it as a whole? An example of this would be an all-you-can-eat menu priced at a single point e.g. €20, or would you charge for each item on the menu individually and add-on a service charge?

Product for services

In this instance our product and service are pretty much the same. However as we have discussed our service is intangible etc. One-way dealing with this is to consider that: service = product + process. So we need to focus upon the process. For example when you arrive at a hotel people process you to ensure that you are registered and your baggage is taken to a room. This is an example of people processing. Another type of processing is possession processing, and an example would be where you take your dog to be groomed, or you organise a service for your car i.e. your possessions are processed. Both of these are examples of product in relation to service.

Place for services

Where you consume the service is a central part of the services marketing mix. With the place element the marketer considers convenience, location, footfall, number of outlets, and timing. Consider an event which takes place over a weekend. If you have a food trailer which sells organic salads to the public you need to make sure that you are actually booked at the event, that people will walk past your trailer and be able to stop and queue, and that you are able to sell to the people when they want to eat. Simply scale this up for businesses like Pizza Express.

Promotion for services

Obviously services are more difficult to assess in terms of attributes in comparison to tangible products. The marketer needs to be more innovative and clear when it comes to the benefits to the target market of his or her service. The marketer can try a number of techniques which include:

  • Emphasising any tangible cues e.g. telecommunications companies will use symbols such as Mercury to emphasise speed. Burger King will use boxes and packaging which emphasise its marketing communications.
  • Exploiting celebrity to provide information about the service. There are many examples of well-known public faces telling us on TV how they purchase life assurance or organise their final will.
  • Branding is everything to service. Starbucks does sells coffee and cake but much of its offering is its service. Starbucks’ logo, its location, the ambience of their stores and the whole service experience is all part of the brand Starbucks. There are many other examples of this including KFC and McDonalds. Can you think of any more?

Physical Evidence

(Physical evidence is) . . . The environment in which the service is delivered, and where the firm and customer interact, and any tangible components that facilitate performance or communication of the service.

Zeithaml et al (2008)

Physical Evidence is the material part of a service. Strictly speaking there are no physical attributes to a service, so a consumer tends to rely on material cues. There are many examples of physical evidence, including some of the following buildings, equipment, signs and logos, annual accounts and business reports, brochures, your website, and even your business cards. Physical evidence lesson >>


Process

(Process is) . . . The actual procedures, mechanisms, and flow of activities by which the service is delivered – this service delivery and operating systems.

Zeithaml et al (2008).

There are a number of perceptions of the concept of process within the business and marketing literature. Some see processes as a means to achieve an outcome, for example – to achieve a 30% market share, a company implements a marketing planning process. However in reality it is more about the customer interface between the business and consumer and how they deal with each other in a series of steps in stages, i.e. throughout the process. Process lesson >>

People

(People are) . . . All human actors who play a part in service delivery and thus influence the buyers’ perceptions; namely, the firm’s personnel, the customer, and other customers in the service environment.

Zeithaml et al (2008).

People are the most important element of any service or experience. Services tend to be produced and consumed at the same moment, and aspects of the customer experience are altered to meet the individual needs of the person consuming it. People lesson >>