Nature of Service Marketing...

The nature of services marketing So far, much of what has been said could be equally applicable to either a product or a service. So, is there anything special about services marketing? At one level, the theory of marketing has universal application – the same underlying concerns and principles apply whatever the nature of the business. However, the nature of a particular service business may dictate a need to place much greater emphasis on certain marketing elements, which in turn could lead to different marketing approaches. It is frequently argued that services have unique characteristics that differentiate them from goods or manufactured products. The four most commonly ascribed to services are: Intangibility – services are to a large extent abstract and intangible. Heterogeneity – services are non-standard and highly variable. Inseparability – services are typically produced and consumed at the same time, with customer participation in the process. Perishability – it is not possible to store services in inventory. However, the huge diversity of types of service businesses suggests that it is difficult to fit services into a neat definition. It is clear, for example, that not all services possess all of the above characteristics and that some even possess the opposite (tangibility, homogeneity, separability and durability) Services possess other special qualities of importance to marketers. Services offer significant opportunity for resource sharing, such as through line-rental or timeshare agreements, where personalized access to telecommunications or a holiday home is kept at an affordable level by sharing access to goods, physical facilities, systems and expertise. The duration of usage, or time element, extends the perspective for pricing strategy beyond relative quality and value. Thus, while activity-based costing is widely used in manufacturing, time-based pricing may be a desirable option in the provision of services. Further scope for competitive differentiation may exist where price-sensitive customers can take advantage of lower cost timeperiods and time-sensitive customers are willing to pay extra for speed or last-minute convenience. Arguably, marketing’s traditional emphasis on the provision of goods as the basis for economic exchange is being replaced by an emphasis on the provision of services – elevating the importance of marketing planning for service businesses. The nature of services marketing There is an increasing trend towards differentiating what were once considered to be tangible products by exploiting the intangible service elements of the offer. The service elements can be added to provide unique features matching customer needs. For example, in the highly competitive photocopier business, service has become a major factor in the buying decision. Photocopiers are leased or sold with service contracts which tie customers to the supplier. Nevertheless, it will be difficult to proceed without attempting to define a service in some way. Therefore, while recognizing that any definition might prove to be unduly restrictive, and that somewhere a service may exist which does not conform to what we say, the definition is: A service is an activity which has some element of intangibility associated with it. It involves some interaction with customers or property in their possession, and does not result in a transfer of ownership. A change of condition may occur and provision of the service may or may not be closely associated with a physical product. Classification of services There have been a number of approaches used to develop a classification scheme for services. The intention behind this work was to provide service managers with a means of identifying other companies who, though operating in different types of industries, shared certain common characteristics. Some of these early approaches were not always helpful in aiding the development of service marketing strategies. In some cases, the fault lay in the oversimplification of the classification scheme used, which did not offer enough strategic marketing insights to be of much value. In other cases, service managers were not open-minded enough to recognize where similarities with other industries could exist.