Question

Please answer in paragraph: 6. What are distinctive characteristics of services? What are resulting marketing challenges?

Answer 1

distinctive characteristics of services:

1. Intangibility:

Services cannot generally be seen, tasted, felt, heard or smelt before being bought. The potential customer is unable to perceive the service before (and sometimes during and after) the service delivery. For many customers of car repair, for example the service is totally intangible – they often cannot see what is being done and many indeed are unable to evaluate what has been done.

2. Inseparability:

There is a marked distinction between physical goods and services in terms of the sequence of production and consumption.

Whereas goods are first produced, and then stored, and finally sold and consumed, services are first sold, then produced and consumed simultaneously. For the production of many services (e.g. counselling, museums, hairdressing, rail travel, hotels) the customer must be physically present.

Some services may be produced and delivered in circumstances where the customer’s presence is optional, e.g. carpet cleaning, plumbing. Other services may rely more on written communication, e.g. distance learning course, or on technology, e.g. home banking. Whatever the nature and extent of contact, the potential for inseparability of production and consumption remains.

3. Variability:

An unavoidable consequence of simultaneous production and consumption is variability in performance of a service. The quality of the service may vary depending on who provides it, as well as when and how it is provided. One hotel provides a fast efficient service and another short distance away delivers a slow, inefficient service. Within a particular hotel, one employee is courteous and helpful while another is arrogant and obstructive. Even within one employee there can be variations in performance over the course of a day.

4. Perishability:

Services cannot be stored for later sale or use. Hotel rooms not occupied, air line seats not purchased, and college places not filled cannot be reclaimed. As services are performances they cannot be stored. If demand far exceeds supply it cannot be met, as in manufacturing, by taking goods from a warehouse. Equally, if capacity far exceeds demand, the revenue and/or value of that service is lost.

5. Heterogeneity:

Even though standard systems may be used, for example to handle a flight reservation, to book in a customer’s car for service or to quote for insurance on his life. Each ‘unit’ of a service may differ from other ‘units’. Franchise operations, attempt to ensure a standard of conformity, but ultimately it is difficult to ensure the same level of output in terms of quality. From the customers’ viewpoint too it is difficult to judge quality in advance of purchase; although this element also applies to some product marketing.

6. Lack of ownership:

Lack of ownership is a basic difference between a service industry and a product industry because a customer may only have access to or use of a facility (e.g. a hotel room, a credit card). Payment is for the use of, access to or hire of items. With the sale of a tangible good, barring restrictions imposed say by a hire purchase scheme, the buyer has full use of the product.

Marketing Challenges in the Service Business:

a) Intangible:

One of the most obvious challenges in marketing services is that you are selling something intangible. People can touch and see a product and are exchanging money for something they need and can take home to use. Conversely, people only see the results of a service, which may not always be immediate. It requires faith on the customers’ part that they will get the desired results for their money. For example, if you own a cleaning service, you have to convince your customers to trust you that their homes will be cleaned to their satisfaction.

b) Competitive Pricing:

How you price your services is an important marketing element. You need to be competitive, so research several competitors’ prices to gauge what your prospective customers expect to pay. Then assess your costs -- your overhead such as rent, insurance, salaries and supplies -- to determine if you can meet your costs and make a profit with that pricing. Consider bundling extra features with your services to differentiate your company and garner a higher price. For example, you can offer to wax floors as part of your service, or do laundry as part of a bonus package.

c) People:

As a services company, marketing your people, including you, is paramount. A service is consumed when it’s purchased or produced -- just the results or effects linger, and sometimes temporarily. For example, your customer’s home will get dirty again, so the result of your cleaning delivery is temporary. The client may or may not call you again based on the overall experience. How your people performed that service will impact repeat business. The relationship is also important; follow up with your customer with personalized notes or a telephone reminder as part of your marketing tactics.

d) Demonstrating Empathy:

Convince your customers in your marketing efforts that you understand their problems and are offering a solution. Do this using people, processes and physical evidence. For example, if you and your employees have families and work full time, this identifies with working families who have no time for housecleaning. Before-and-after pictures in your marketing materials, such as your website, brochures and advertising, are all physical evidence. Finally, you may need to interact personally with customers multiple times as part of the marketing process to establish a relationship and convince them you understand their needs.