Question

QUESTION 3
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

Let us take a look at the four unique characteristics of services:

1) Intangibility: When you buy a good, such as a car or a book, you can see it, touch it, feel it etc. before you actually purchase it. So, goods have tangible qualities which give information to customers so that they can compare one good with another and then decide which one to by. Services, on the other hand, are not tangible. These intangible services can not be experienced or consumed in any way until the transaction or purchase is completed. Customers may feel that they are having to take a consumption decision without having adequate information about it and so it takes a longer time and more efforts to get them convinced.

2) Inseperability: Physical goods such as cars or clothes, may be produced at one place, sold at another and used at yet another place. Services are different as they are generally provided and used up at the same time in the same place like a haircut or a car repair. So, a service has a single point of purchase and the provider itself is the product. This nature of inseperability may lead to customers having high expectations regarding the services and may lead to disappointment if not met. It is easier to get to know ones customers and their preferences well if there are a few customers but the same is not possible for a larger magnitude of customers.

3) Perishability: A physical good like a car can be stored and sold some time in the future if it does not get sold today. But services, are generally perishable in nature, implying that its not possible to store any unused capacity for future use or sale. For example, even if a restaurant is packed one night and empty the next, the staff and their expenses remain the same. The revenue shows a different picture and it affects profits, just like the case of an half empty flight. So, the service provider needs to sell the maximum capacity in order to earn profits.

4) Variability: Once you decide to purchase a specific model of car, you know there wont be any difference in the quality no matter which company dealer you buy the same car from. These goods are produced using automated procedures and quality assurance systems which give way to consistent quality products. On the other hand, the quality of services can be different due to various factors, such as who is the service provider, where, when and how is it being provided etc. The more the services are human-dependant, the more the service business is susceptible to variability.

Now, lets take a look at the strategies one can adopt in order to overcome these charecteristic challenges:

1) Intangibility: The best way to overcome this challenge is via communication. You can do so via customer testimonials and reviews. One should take written testimonials from their existing customers and put up on the business's website or even design a well-descriptive business brochure. Customer reviews on established and credible sites like Google as well as social media ratings will help to attract potential customer by providing them valuable information even before they talk to you.

2) Inseperability: A rock-solid customer service is the answer to this challenge. As a service provider, you need to make sure your customers are happy, and if they are not, then what is teh reason behind it. You should also record customer preferences in a master database so that you can provide the service accordingly whenever the customer comes back for seconds. An efficient customer relationship management system could help you keep track of the preferences and customizations of each customer.

3) Perishability: The key to overcoming this challenge is to efficiently and cautiously manage supply and demand. This way you can minimize the losses and make sure your profits increase. The periods when your sales dip, you can take the help of pricing strategies, aggresive promotions, discounts, loyalty programs etc. to stimulate demand.

4) Variability: Establishing standard procedures, checklists, frequent audits, can help to ensure that there is consistent service delivery. Proper training of the employees helps to ensure lesser mistakes and a higher level of efficiency. Using customer feedbacks, regular improvements and consequent responses to the customer grievances could translate it into the customer's mind that your service is of consistent quality.