The nature and distinctive characteristics of services merit their own management frameworks. Discuss.
According to Lovelock (2002) a service is an act or performance
offered by one party to another. He goes on to say although the process may be
tied to a physical product, the performance is essentially intangible and does
not normally result in ownership of any of the factors of production. To
explain the term in simpler terms he states that more humorously, a service has
also been described as "something
that may be bought and sold, but which cannot be dropped on your foot."
Palmer (1994) defines a service as the production of essentially intangible
benefit either in its own right or as a significant element of a tangible
product which through some form of exchange satisfies an identified consumer
need. Examples of services include education, ATM and shoe repair. There are four
main characteristics that distinguish services from products. They include intangibility, inseparability, heterogeneity and perishability. These
aspects affect the designation of the management
framework of a services firm. A
management framework is defined as a structural plan designed to be used as
a tool to improve planning processes and capabilities (www.dtf.vic.gov.au, 2013).
Intangibility
The
primary distinguishing characteristic of services in relation to goods is
normally considered to be intangibility. Palmer (1994) states
that “a pure service cannot be assessed using any of the physical senses. Services
lack the palpable or tactile quality
of goods and they cannot be touched or viewed. Unlike physical products,
services cannot be seen, tasted, felt, heard, or smelled before they are bought.
For example when l buy a dress l can see, feel, touch and even try it on before
buying it (tangibility) but when l
pay fees for a term in college l am paying for the benefit of deriving
knowledge and education which is delivered to me by lecturers (intangibility).In the case of a dress, l
can immediately fit and check it out so that l see whether l really like it but
there is no way l can do so when l am being taught by a lecturer because generally,
a service cannot be seen in advance by a customer.
Because
of service intangibility, in assessing the quality of a service, the customer
relies more on subjective impressions
and less on concrete evidence. Therefore it is the duty of the service
marketer to “make tangible” the
intangible through the physical evidence. Customers normally make inferences
from the equipment, people and printed materials to reduce uncertainty. Marketers
should therefore use informative
advertising as their marketing strategy in order to provide detailed
information that would reduce the perception of risk and uncertainty that
customers normally have when they are attempting to purchase a service.
As many
authors agree, also important as a factor influencing consumer satisfaction
with a service is the physical setting and the people within which it occurs (Bessom and Jackson, 1975; Lovelock,
1979; Shostack, 1977; Bateson, 1979). In this case, marketing
strategies adopted by a firm need to be adapted such that they give tangible proof of service quality. One
of the strategies that can be implemented is the use of tangible cues in order
to give customer a basis to evaluate the service before consumption. Talking of
“people”, Barclays bank’s frontline
employees (including the security guard) are friendly and that may communicate
service quality to the customer. Also, the physical setting of Barclays bank
for example the availability of the CCTV
security system, security guard and technical doors are a tangible proof of
a service quality offered by the bank.
There are always some tangible elements which the
help consumers evaluate services before consumption. On a flight for example,
the total service experience is an amalgam of many disparate components such as
the experience at the airport, the nature of the services, on-board and
in-flight entertainment. In addition, quality of furniture in a lawyer’s office
or personnel appearance may give a customer tangible proof of service quality.
Hotels can use brochures and car rental services can use the physical features
of the car. Marketers should provide tangible cues that are easily understood
by customers and directly related to the bundle of benefits the service
provides.
Inseparability
Inseparability
is taken to reflect the simultaneous delivery and consumption of services
(Regan
1963).
Kotler (2000) postulated that services
are typically produced and consumed simultaneously, unlike physical goods,
which are manufactured, put into inventory, distributed through resellers, and
consumed later. There is involvement of the customer in the production process. According to Groonros (1978) inseparability
of services is believed to enable
consumers to affect or shape the performance and quality of the service.
The
fact that the production of services cannot normally be separated from their consumption
results in producer–consumer interaction (service
encounter) assuming great importance within the service offer. The service
process can itself define the benefit received by the customer (Palmer, 1994). Customers form their opinions about services
through their interaction with the service personnel who directly come into
contact with them. They tend to equate the service quality with quality of this
interaction.
As a result, an
organization’s management framework should be crafted in such a way that much emphasis
is put on internal marketing in order to ensure high quality service encounter
or “moment of truth”. A service firm
should establish a service culture
and also develop a marketing approach to human resources management in order to
create within a firm high quality service encounters. This will reduce or
eliminate problems of service
inseparability posed to marketing managers.
A
service culture is a culture that supports customer service through policies,
procedures, reward systems and actions Kotler et al (2006). The most important
service culture aspect is empowerment.
In order to ensure favorable service encounters, firms should empower employees
to make decisions during their interaction with customers. This reduces
inconveniences during the service encounter resulting in a customer positively
viewing the service he or she would have received. Repeat purchasing of a
service is therefore encouraged. For example the Southern Eye’s Advertising
Team is empowered to carry out make- good
advertisements whenever a customer complains about errors in the previous
advertisement that would have been made. As a result the quality of the service
encounter is enhanced thereby customer loyalty facilitated.
Developing a marketing approach to human
resources means creating jobs that attract good people, hiring people who are
good for the job, stressing team work and most importantly training, developing
and motivating public contact personnel especially high-contact service ones. For example Alpha Media Holdings’ advertising
team attends different seminars and breakfast meetings so that they attain
new or improve their customer service techniques. Since the public personnel
are part of the service experience their emotions and attitudes are apparent to
the customer and can affect the service experience for better or for worse. It
is essential to build trust and teamwork and making employees loyal to the
company’s mission. Employees must also be trained in ‘soft’ management skills
such as reliability, responsiveness, empathy, assurance and managing the
tangibles that surround the service in order to achieve service quality.
Heterogeneity
Heterogeneity
reflects the potential for high variability
in service delivery (Zeithaml et al 1985). Services are highly variable
since they depend on who provides them and when or where they are provided.
The
quality of service depends also with the state of mind of the service provider.
This is a particular problem for services with high labor content, as the
service performance is delivered by different people and the performance of
people can vary from day to day (Rathmell, 1966).
Onkvisit
and Shaw (1991) consider heterogeneity to offer the opportunity to provide a
degree of flexibility and customization of the service. Therefore in crafting a
marketing management framework, a service firm can adopt customization as a
strategy to reduce the impact of inconsistency in service provision. This
entails taking advantage of the variation inherent in each service encounter by
developing services that meet each customer’s exact specifications. For example
variability in hairdressing services allow for customization and also price differentiation thereby the
service provider is able to yield high profits.
However, Rathmell (1966) says that heterogeneity
is common in labor intensive organizations and that performance of people can
vary from day to day. The heterogeneity factor often leaves the customer
confused. He/she feels that services performance is a non-standard affair,
varying widely and is dependent on who actually performs the service. Therefore
in order to deal with variability in service delivery a service firm may adopt the
use of technology (machines) so that it (the firm) becomes low labor intensive thereby
reducing the negative effects brought about by variability in service delivery.
For example the uses of ATMs
(Automated Teller Machines) in banks effectively reduce inconsistency.
Perishability
In general, services cannot be stored and carried forward to a
future time period. Onkvisit and Shaw (1991) suggest that services are “time dependent” and “time important” which make them very
perishable. For
example, spare seats on one aeroplane cannot be transferred to the next flight,
and query-free times at the reference desk cannot be saved up until there is a
busy period Hartman and Lindgren
claim that the “issue of perishability is primarily the concern of the service
producer” and that the consumer only becomes aware of the issue when there is
insufficient supply and they have to wait for the service.
The perishability factor in services marketing is perhaps one of
the crucial factors faced by marketing managers. Because of the perishability
factor of a service, demand forecasting becomes the crux of services marketing.
Along with demand, creative thinking and capacity utilization is necessary.
The perishability factor of services calls for services
organizations to adopt marketing strategies such differentiation pricing. For example, in the Transport Industry Commuter
Omnibuses in Bulawayo’s high density areas, service producers deal with spare
seats in a Kombi and fluctuating demand for transport by using differential pricing. They charge five
rand (R5) early in the morning when demand for transport is high and four rand (R4)
during the day when demand for transport is lower. In this case they are able
to match fluctuating demand with capacity utilization.
Conclusion
Although the
characteristics of services pose many challenges for marketing managers and a
service organization as a whole, it is important to note that such
characteristics come with advantages. These include the ability for a services
firm to easily apply the concept of customization
which is highly profitable but costly in firms dealing with tangible products.
REFERENCES
1. Journal of
Service Research/ May 2004
2. Palmer,
Adrian (2000), Principles of Marketing, Oxford University.
3. Hoffman, K.D. and
Bateson, J.E.G. (1997). Essentials of Services Marketing, Orlando, and Florida: The
Dryden Press
4. Phillip Kotler,
Marketing Management 7th Edition.
Comments
Post a Comment