Service Marketing

 

Introduction

Service marketing is not done in the same way as marketing of tangible goods. This is because while goods are tangible and easy in value determination, services are intangible and also inseparable from the provider of them. This implies that effective service marketing depends highly on the manner in which the service provider delivers the services. Service organizations are required to build and maintain positive relationships with all their customers in efforts to ensure that the customers are satisfied with the provided services through customer relationship management. Customer relationship management model helps in managing the types of interaction between the company and its current as well as future customers. The model allows use of technology to organize, market, automate, ensure effective customer service, offer technical support, and synchronize sales. This way, the organization is able to understand the current customer base and thus be able to retain it through effective customer experience. The model also makes it easy for the organization to attract new customers, increase profitability, win new contracts, and reduce customer management costs.

Marketing of Services

            The marketing of services is based on their five major features. These are non-ownership, perishability, inseparably, intangibility, and variability. The issue of perishability is based on the fact that services unlike most other physical products cannot be stored. The services are produced the moment they are consumed. Perishability is also based on the fact that a customer cannot touch, smell, or see the products he chooses as he does for other physical goods. What the customer does is to base his assessment on past experience, location of the service provider, and word of mouth from other customers. This explains the intangible nature of products that raises issues for customers and suppliers (Bhattacharjee, 2006).

In addition, the customers only purchase the skills of the suppliers, the service providers. This leads to difficulty for suppliers to ensure consistent quality of service since one is unable to duplicate the same provided service to the next customer leading to service variability. Even though offered by the same service provider, it is possible to note some significant differences in the services offered. Similarly, different service providers in the same organization offer varied services to customers even when requested for the same services (Buttle, 2009).  

            Inseparability is another key distinguishing characteristics of services. It is notable that the service provision of the provider cannot be separated from the service consumption and the customer. Non-ownership is the last major characteristic of a service. Unlike the case of physical product, the consumer does not make the purchase of services to secure ownership of the product. The customer only pays for access or use of the purchased service (Hoffman& Bateson, 2009).

In simple terms, service marketing involved marketing of intangible products. With the major features of services, the service providers should be careful in their marketing to ensure increased sales and profitability. The fact that a service production cannot be repeated exactly by the same service provider calls for effective marketing to ensure that a service producing firm is profitable in the business. Since it is not possible to seen services before making a choice, marketing is through the word of mouth for new customers and experience for old customers (Mudie&Cottam, 2012). The service producing firm should thus offer quality services that will ensure referrals.

Service Promotion

With intangibility of services, it is not possible to resale the products as is the case for physical goods. Marketing and promotion of services is thus a challenging but very important task. Service producing firms should consider a number of factors to ensure effective marketing of their services. To start with, the service provider should look for a key differentiator. Service consumers look for a key differentiators in the services offered; an aspect that will attract them to the same service provider again. Service differentiation is required even in marketing of products. With so many firms providing the same products (physical goods), customers are attracted to one firm over the other as a result of the quality and differentiation of the service(Buttle, 2009). Even when asking for a tangible product, a consumer will look the best services; he will consider how the tangible product is offered to him, the kind of salesperson he interacts with, the type of communication used, and the way the product is packed/ wrapped as well as how urgent he is served.

Relationships are also important in service marketing. Since the purchased product is intangible, the decision of the customers to make the purchase will depend on the extent to which the service provider is trustworthy. A service provider will ensure trusted relationship with the customer through fulfilling promises and listening to the customer. The service provider should listen to the customer needs and fulfill them. He should ensure that he offers quality services thus building a strong and lasting relationship with the clients(Buttle, 2009). This way, the service provider is ensured of repeated sales and positive word of mouth from others.

Customer retention is also a major factor in service marketing. The business world today is in an era in which different service providers offering the same services are fighting for a limited pool of customers. It is also notable that several firms offering the same services are located in the same locality. For instance, it is possible for a customer to find a chain of salons in the same street though belonging to different people. Customer retention in this case is more important than attracting a new base of clients. With services being generated at the same time they are consumed, the customer should be actively involved by taking into consideration his feedback and requirement. The service provider should ensure that he clearly understands the needs of the customers and serves them. This way, he will ensure increased satisfaction leading to high customer retention, which is very beneficial in fighting competition (Bhattacharjee, 2006).

It is easy to replicate service offering calling for effective promotion so that one’s service is differentiated in the mind of the customer. Different service providers such as banks, airlines, and insurance companies offer the same services. Customers in this will be attracted to one bank over the other based on the quality of the services offered. Investing in advertising is also very important as the firms try to convince customers of uniqueness of their services(Hoffman& Bateson, 2009). This is meant to retain old and attract new customers.

Pricing of Services

            Pricing of services is not easy as pricing of tangible products. Pricing of physical goods involves considering the used raw materials and other direct costs. For the case of services, pricing incorporates labor costs and overhead costs. When pricing the cost of food in a restaurant for instance, the accountant does only consider the cost of food offered but also the price of the environment provided. The final price of the service will also include the mark up for adequate profit margin that will keep the business running(Mudie&Cottam, 2012).

The first step in pricing of services is finding what the service customers value, adjusting the service to incorporate that value, and then determining the price of the offered value. This way, pricing of the services is intrinsically linked to the positioning strategy. The service provider should determine for instance if customers are interested in convenience over price. Pricing based on value not only involves understanding what customer values but also what can be included in the services to ensure differentiation from competitors(Buttle, 2009). This is because it is possible for a service provider to price his services at a higher value if they are different in quality from those of the competitors.

The service provider should also differentiate the price point and his value proposition. He should be able to demonstrate the offered value to the customer. If the customer is unable to see the offered value and thus bargains for a lower price, the service provider should play a trump card. This is based on the fact that it is possible for customers to have the intended lower price but without high value aspects of the provided service. This way, the service provider will make the sale but after removing the valuable features (Bhattacharjee, 2006). 

Changes of pricing of services depend on the position the service is in the product life-cycle. For instance, if the service provider is the market leader using skim pricing and realizes that he is being overtaken by competitors in terms of value, he should revise both the price and the services to match with or be better than those of the competitors. If new entrants enter the market with low prices, a service provider should adopt a penetration pricing strategy in order to outdo them and maybe remove them from the market(Hoffman& Bateson, 2009).

Distribution of Services

One of the major features of services is inseparability in that they are offered in the presence of the providers. Additionally, service delivery happens at the same time as its production and thus cannot be transported or stored. This implies that distribution of services is based on the location of the service provider. Service providers should thus consider the place in which they need the service to be offered(Mudie&Cottam, 2012). For instance, a salon will be better situated in a busy upscale market when compared to the outskirts of a city. On the other hand, a holiday resort will be better located in the countryside, far from the hassles, noise, and pollution of the city.

The distribution type used provides the required link between service producers and their customers all over the globe. The efficiency of the distribution sector should ensure that consumers have a wide variety of services to choose from and at competitive prices. Distribution of services can be carried by intermediaries with the intermediaries co-producing the required services but maintaining quality and important features. This way, it becomes easy to distribute services effectively by ensuring that they are offered at convenient places for the customers. Customers are able to get the required services from different locations rather than incurring transport costs travelling to the service principal providers (Bhattacharjee, 2006).

 

 

Gaps Model of Service Quality

Service firms should insist on customer-oriented philosophies that help in realizing quality management approaches. Managers in service firms should be convincing that their services are customer-focused and that they are continuously improving on performance. Service firms operate under resource and financial constraints like other firms. It is therefore important that customer expectations and needs are understood and measured based on the perspective of the customers so that any service quality gaps are identified and resolved. Managers should come up with cost effective strategies to close service quality gaps and prioritize on the gaps to major on(Buttle, 2009).

Using SERVQUAL model, there are seven gaps in the service industry that should be dealt with. Gap 1 (customer’s expectations vs. management perceptions) results from inadequate marketing research, ineffective upward communication and so many management layers. Gap 2 (management perceptions vs. service specifications) result from inadequate service quality commitment, unfeasibility perception, absence of goal setting, and inadequate of standardization of tasks. Gap 3 (service specifications vs. service delivery) result from role conflict and ambiguity, poor fitting of employees to jobs and technology to jobs, ineffective supervisory control systems, and lack of teamwork(Mudie&Cottam, 2012).

Gap 4 (service delivery vs. external communication) results from inadequate horizontal communication. Gap 5 (discrepancy between the expectations of the customers and perception of what is delivered) results from influences of the customers and the shortfalls of the service provider. Gap 6 is the discrepancy between the expectations of the customers and the perceptions of the employees resulting from different understanding of the expectations of the customers by front-line employees.Lastly, Gap 7 is the discrepancy between the perceptions of the employees and the perceptions of the management resulting from different understanding of the expectations of the customers by managers(Hoffman& Bateson, 2009).

The measurement of the quality of services should incorporate the expectations of the service customers as well as the perceptions of the service. This means that the expectations and the perceptions should align. The perception of consumers in terms of service quality is based on five generic dimensions namely tangibles, reliability, responsiveness, assurance, and empathy. Tangibles used in measuring service perception involved physical facilities, appearance of the personnel, and equipment. Reliability refers to the ability of the service provider to provide the promised service accurately and dependably.  Responsiveness implies to the willingness of the service providers to respond to customer questions and provision of prompt service. Assurance includes competence, security, courtesy, and credibility. Empathy includes understanding the customers and effective communication with then customers(Mudie&Cottam, 2012).

Conclusion

            Even though services are different from physical goods, entering into the service industry does not mean that the firm is entitled to losses. Service providers should implement effective marketing strategies that will ensure that their services are considered better than those of the competitors. They should understand the major features of services that make them different from physical goods and know how to ensure that they consider those features in marketing. The pricing, distribution, and promotion strategies used in marketing services should be effective so that a service providing firm not only retains the current customers but attracts new ones as well. Service providers should also understand the seven gaps used in measuring service quality and understand how to address them so that customer perceptions match with their expectations. Lastly, service providers should understand the five generic dimensions used in measuring quality of services and know how to maximize on them to have them attract and interest customers. They should know how to use the generic dimensions to their favor. 

 

 

References

Bhattacharjee, C. (2006). Services marketing: Concepts, planning and implementation. New Delhi: Excel Books.

Buttle, A. (2009). Customer Relationship Management: Concepts and Technologies, 2nd Ed. New York: Routledge.

Hoffman, K. D., & Bateson, J. E. G. (2009).Services marketing: Concepts, strategies & cases. s.l.: Cengage Learning Services.

Mudie, P., &Cottam, A. (2012).Management and Marketing of Services, 2nd Ed. London: CRC Press.