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Characteristics of Services

Services Marketing

AuthorProf. K. Ravindran

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Introduction The challenges associated with marketing a

service-based business are quite different from the challenges associated with marketing a product-based business.

A thorough understanding of the competitive dimensions and limitations of the industry is necessary for a firm to formulate its service strategy.

Therefore, the firm must focus on Service Characteristics to: Explore Identify Understand, in order to

► Develop plans and Competitive strategies Services Marketing

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You can see it, feel it, touch it and even test it prior to the purchase of car.

Products have tangible qualities that provide information to consumers so they can easily compare one product to another.

Services, on the other hand, are intangible, so hard to explain and

display. Most services cannot be experienced or consumed until the

purchase is made.

Customers can easily end up feeling like they have to make a

purchasing decision without adequate information.

Intangibility

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What is the answer to this challenge? Communicate, Communicate, Communicate. Use tangible cues to communicate service nature and

quality: Ambience Facilities Uniforms Paper work

Also Use A well-designed brochure or Website, which can provide information to customers before they

hire/ purchase. Customer testimonials Referrals - an excellent way to reduce the level of intangibility. Increase customers’ comfort level by explaining your service in

as much detail as possible. Customer preview visits.

Improving overall efficiency will increase chances of retaining older customer as well as securing new business.

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InseparabilityTo continue using the automobile analogy, cars are produced at one location, sold at another, and used at yet another location.

Services are unique because they are usually provided and consumed at the same time in the same location

(e.g. a haircut or car tune-up).

Because of the characteristic of inseparability, customers have strong expectations about how a service will be

provided, which can lead to disappointment if their expectations are not met.

People can observe the entire service delivery process and form their opinion.

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How do you deal with unhappy customers?

How do you ensure customer satisfaction? Provide employees with:

Professional and behavioural training Motivation Reward and recognition

If you don’t know the level of your customers’ satisfaction with your service, ask them!

A solid customer service process is the key to managing this challenge effectively.

Services Marketing

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PerishabilityIf a car does not sell today, it can be stored and sold the following day or at some other time in the future.

Services, on the other hand, are often perishable, meaning that unused capacity

cannot be stored for future use or sale. For example, a restaurant might be full one

night and half empty the next. If the restaurant runs with an inflexible staffing

model, expenses are the same each night. However, the revenue picture is quite different,

which impacts profits. The same is true for Airlines – every empty seat on the aircraft is

lost revenue.

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SolutionThis challenge can be overcome by carefully managing supply and demand.

A restaurant might operate with fewer staff during the week and hire additional staff to cover weekends when demand is higher. This strategy will allow the restaurant to provide the same level of customer service with varying customer demand—and improve productivity.

Does your business have peak periods? What can you do to control supply and demand? Tip: Use pricing strategies and promotions to

stimulate demand for your service.Services Marketing

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VariabilityOnce you have decided to buy a Honda Accord, you know that there will be no variation in the quality of the Accord from one Honda dealer to another.

Manufactured goods tend to have automated processes and quality assurance procedures that result in product consistency.

However, the quality of a service can vary by many factors, including who provides it, where it is provided, when it is provided, and how it is provided.

The more your business relies on humans to provide services (instead of automation), the more susceptible you are to variability.

If the variation in service quality becomes extremely obvious, customers may be dissatisfied and switch to a competing firms.

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How can you manage this challenge?

Establish Standard procedures (or checklists)

Take special care in: Recruitment and selection

Provide consistent Training & Motivation

Standardization of service through technology E.g. ATMs reducing bank teller service

variability for customers. Services Marketing

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Summary

It is important to understand the service characteristics, as it helps firms to identify the limitations of the industry and competitive dimensions, which is essential to formulate firm’s service marketing strategy.

Services Marketing

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Question 1

As a services marketing manager, how would you develop competitive marketing strategies for a higher education institution?

Next lecture:

Consumer Behaviour in Services

13Services Marketing