Service Marketing – Basic issues

THE CHALLENGES OF SERVICE MARKETING MANAGEMENT

Service marketing management deals with the actions and processes that enable a service provider to deliver services to end consumers.

The services sector includes industries like banking, insurance, communications, consulting, non-profits, travel and transportation, and all other businesses that do not produce tangible goods.

What, then, do these businesses produce?

There are some defining characteristics that distinguish services from physical products. We should be aware of these characteristics, which correspond to the challenges of service marketing management. Understanding the product will help meet those challenges.

1. INTANGIBILITY

Consumers can see and touch goods—they’re a physical product. They know exactly what they’re buying when they’re spending their money. They may even be able to carry the item away with them—although they have to drive off the lot when they buy a car.

This portability is not the case with services. The effects of services may not be apparent immediately, and what’s done is not always obvious. The client of a management consultant, for example, may have to wait for months (or years) before they can see the results.

Lack of Emotion: Physical products can trigger an emotional impulse compelling the customer to buy. Color, shape, and style are important for physical products—especially those aimed at the general public.

No such built-in emotional appeal exists in the intangible world of services. The consumer might have a hard time even imagining all the details involved in what is done for them by a service business.

No product or service can be completely tangible or intangible, of course. For example, a law firm selling legal services needs business cards, computers, and other tangible objects to practice law—but the firm’s clients aren’t paying for them. Similarly, a hardware store will need salespeople, guarantees, and operating manuals and lessons to sell drill machines or table saws.

Even so, it’s easy to tell the difference between a service business and a tangible goods business.

2. LACK OF OWNERSHIP

You can buy a product, take it home, own it for years, and perhaps even resell it. But you can’t do the same with a service. You can avail it only for a specific period of time and then it’s over–unless you pay again. The lack of physical ownership makes it harder to sell services.

Even companies don’t own and control services the way they can control tangible products. It’s because service delivery depends on human interactions between the service provider’s employees and customers.

3. PERISHABILITY

Another defining quality of services is that they are perishable. I don’t mean that they will spoil, but they are time-bound. You can’t build an inventory or store services like you can with physical products. Services are usually performed at specific times and on stated dates.

A dentist cannot start a procedure until the patient is in the chair. An airline cannot sell a seat on a flight that has already left the gate.

4. HETEROGENEITY

Services are heterogeneous. Service businesses operate through several diverse elements and interactions. A bank may offer customer service through a helpline or website and cash withdrawals through ATMs and counters.

In most industries, the service delivery process involves a lot of human interaction. As human behavior is subjective and unpredictable, no two sets of services can be identical in their details and results.

5. INTERACTIVITY

Service delivery depends on a chain of interactions between customer and service provider, as well as between the people working inside the service provider.  The customer is central to the whole process and all activities must aim at their satisfaction.

Prosumership: For the service to be delivered, the consumer needs to cooperate and coordinate with the service provider. For example, if you’re offering bill payment over the internet—the service—the consumer must have a valid payment method and a working internet connection, and be able to use both of them.

Service marketing experts call it “prosumers”. Service consumers (or prosumers) have to proactively participate in the service delivery process.