Question

The American Marketing Association defines services as - “Activities, benefits and satisfactions which are offered for sale or are provided in connection with the sale of goods.” It is the action of doing something for someone or something largely intangible tends to be an experience that is consumed at the point where it is purchased and cannot be owned. A person could go to a bank one day and have excellent service, and then return the next day and have a poor experience. This part discusses the special issues concerning the marketing of services. Explain the Four unique characteristics of services and give Four strategies to overcome each characteristic.

Answer 1

Four unique characteristics of services and Four strategies to overcome each characteristic

1. Services are intangible

It is easier to sell a product than a service because a product is tangible or physical.

When customers can see a product and examine its shape, colour, features, size and the quality of materials used, they can immediately make a purchase decision. Indian consumers like to ‘feel’ the product before they buy — especially if it is clothing.

However, a service is intangible. Consumers cannot feel or own it like a product. So it takes longer to convince them.

Recommendation:

There are special approaches to overcome the challenge of selling a service. One is customer testimonials. You can take written testimonials from your existing customers and put these, along with each customer’s photo, on your business website, in your shop and in your brochures.

Customer reviews on established websites such as Yelp, Google and TripAdvisor also work well. Also enable social media ratings on networks that attract followers who are your potential customers.

2. The provider is the product

A product can be bought from different channels: online, in a mall, in a convenience store, etc.

But a service has one point of purchase. The buyer deals directly with the service provider or his distributor. And they go to that same point every time they need that service.

When you are dealing with a few customers, it is possible to get to know them well. You will know their preferences and their level of satisfaction with your services. But that may not be possible when there are dozens — or hundreds or thousands — of customers.

Recommendation

The answer is systems and processes. The Marriott Group of hotels, for instance, records customers’ preferences in a master database that is accessible to any hotel in the Marriott chain, anywhere in the world. So when you make a reservation, they already know you, and set your room up accordingly! And their customers love that.

By using a customer relationship management system, you can keep track of the preferences of each customer. This will allow you to deliver highly customized service every time. Just don’t overdo it, as companies that know too much can spook customers.

3. They’re perishable

Like some products — food items for instance — services are perishable. There’s only so much time in a work day. The service provider needs to sell maximum capacity in order to be profitable. Unfortunately, there won’t ever be a steady queue of customers waiting to be served one after another.

Let’s take the example of an airline. If a flight is going half empty, the revenue collected from ticket prices will not suffice to cover the operational costs. So airlines use different strategies to fill their airplanes. They might club flights for a particular route or use code-sharing arrangements with partner airlines or join an airline alliance like Star Alliance.

So it is a matter of balancing demand with supply. If you can do that, then you minimise your business losses and increase your profitability. There are periods of demand (like the holiday season) and then there are periods when sales dip due to low demand.

Recommendation

There are a couple of marketing strategies to counter periods where there is less demand:

• Aggressive promotion, including online and offline advertising.
• Discounts and sales during low-demand periods.
• Loyalty programs with points.

Savvy marketers can create a sense of false urgency and false demand, causing people to rush out to buy services. They do this by offering discounted pricing for a limited period.

4. Quality can vary from day to day

A product might have little variability, because every unit of that particular model is built to an exact specification or design created by a manufacturer.

But with a service, there is a lot of variability. There will be variations depending on who offers the service, and at what location, how busy that day’s service schedule is and other factors.

Recommendation

This can be achieved through standard processes and frequent audits. By training yourself and your employees to adhere to the same process every time, you can achieve a higher overall level of service.

Use customer surveys and feedback to find out where/when/under what circumstances the greatest variation in service quality occurs. Frequent improvements, in response to customer feedback, can lead to increased customer satisfaction.