Understanding Service Marketing
Before understanding the meaning of ‘service marketing’ let’s
first try to understand the meaning of the term ‘service’.
A service is the action of doing something for
someone. It is largely intangible (i.e., not in the form of material). A
product is tangible (i.e., material) since you can touch it and 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 cafe one day and have
excellent service, and then return the next day and have a poor experience.
Definition of
Service Marketing:
The American
Marketing Association defines services marketing as an organisational function
and a set of processes for identifying or creating, communicating, and
delivering value to customers and for managing customer relationship in a way
that benefit the organisation and stake-holders.
Service
marketing is marketing based on relationship and value. It may be used to
market a service or a product. With the increasing prominence of services in
the global economy, service marketing has become a subject that needs to be
studied separately. Marketing services is different from marketing goods
because of the unique characteristics of services namely, intangibility,
heterogeneity, perishability and inseparability.
In most
countries, services add more economic value than agriculture, raw materials and
manufacturing combined. In developed economies, employment is dominated by
service jobs and most new job growth comes from services.
Jobs range from high-paid professionals
and technicians to minimum-wage positions. Service organizations can be of any
size from huge global corporations to local small businesses. Most activities
by the government agencies and non-profit organizations involves services.
The American Marketing Association,
defines services as activities, benefits, or satisfactions that are offered for
sale or provided with sale of goods to the customer, that is, pre-sale and
after-sales services. Berry states, ‘while a product is an object, devise or
physical thing, a service is a deed, performance, or an effort’.
Features of Services Marketing:
1. Intangibility:
A physical product is visible and
concrete. Services are intangible. The service cannot be touched or viewed, so
it is difficult for clients to tell in advance what they will be getting. For
example, banks promote the sale of credit cards by emphasizing the conveniences
and advantages derived from possessing a credit card.
2. Inseparability:
Personal services cannot be separated
from the individual. Services are created and consumed simultaneously. The
service is being produced at the same time that the client is receiving it; for
example, during an online search or a legal consultation. Dentist, musicians,
dancers, etc. create and offer services at the same time.
3. Heterogeneity (or variability):
Services involve people, and people are
all different. There is a strong possibility that the same enquiry would be
answered slightly differently by different
people (or even by the same person at different times). It is important to
minimize the differences in performance (through training, standard setting and
quality assurance). The quality of services offered by firms can never be
standardized.
4. Perishability:
Services have a high degree of
perishability. Unused capacity cannot be stored for future use. If services are
not used today, it is lost forever. For example, spare seats in an aeroplane
cannot be transferred to the next flight. Similarly, empty rooms in five-star
hotels and credits not utilized are examples of services leading to economic
losses. As services are activities performed for simultaneous consumption, they
perish unless consumed.
5. Changing demand:
The demand for services has wide
fluctuations and may be seasonal. Demand for tourism is seasonal, other
services such as demand for public transport, cricket field and golf courses
have fluctuations in demand.
6. Pricing of services:
Quality of services cannot be
standardized. The pricing of services are usually determined on the basis of
demand and competition. For example, room rents in tourist spots fluctuate as
per demand and season and many of the service providers give off-season
discounts.
7. Direct channel:
Usually, services are directly provided
to the customer. The customer goes directly to the service provider to get
services such as bank, hotel, doctor, and so on. A wider market is reached
through franchising such as McDonald’s and Pizza Hut.
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