THE NATURE AND DISTINCTIVE CHARACTERISTICS OF SERVICES WARRANT THEIR OWN MANAGENT AND MARKETING FRAMEWORK. DISCUSS FULLY.

INTRODUCTION

One of the major trends in the economy in recent years has been the dramatic growth of services. The services industry, unlike in the past now contribute considerably to the gross domestic product. Service industries vary greatly. The governments offer services through courts and private nonprofit organizations offer services through museums, charities, churches, colleges etc.

Kotler (1996) – defines a  service is any activity or benefit that one party can offer to another that is essentially intangible and does not result in ownership of anything.

Douglas (2001) Defines services as deeds, efforts or performances.

Palmer (1994) defines services 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.

Services differ from tangible products and as a result they often require additional marketing approaches. Service marketing requires more than just traditional external marketing using the four Ps. In a product business, products are fairly standardized and can sit on shelves waiting for customers.  But in a service business, the customer and frontline service employee interact to provide the service. Thus, service providers must work to interact effectively with customers to create superior value during service encounters. Effective interaction, in turn depends on the skills of frontline service employees, and so the service production and support processes backing these employees. Thus successful service companies focus their attention on both their employees and customers. They understand the service-profit chain, which links service firm profits with employee and customer satisfaction. This chain consists of five links:

v  Healthy service profits and growth – superior service firm performance, which results from…

v  Satisfied and loyal customers – satisfied customers who remain loyal, repeat purchase, and refer other customers, which results from…

v  Greater service value – more effective and efficient customer value creation and service delivery, which results from…

v  Satisfied and productive service employees – more satisfied loyal and hard working employees, which results from…

v  Internal service quality – superior employee selection and training, a quality work environment, and strong support for those dealing with customers.

Services marketing, unlike goods marketing requires both internal marketing and interactive marketing.

Internal marketing means that the service firm must effectively train and motivate its customer-contact employees and all the supporting service people to work as a team to provide customer satisfaction. For the firm to deliver consistently high service quality, everyone must practice a customer orientation. It is not enough to have a marketing department doing traditional marketing while the rest of the company goes on its own way. Marketers also must get everyone else in the organization to practice marketing. In fact, internal marketing must precede external marketing.

The major differences between the marketing of goods and t he marketing of services are most commonly attributable to four distinguishing, characteristics – intangibility, inseparability, in-inventorability and inconsistency.

INTANGIBILITY

This means that services lack physical substance and therefore cannot be touched or evaluated like goods. It is impossible for the service users to taste, feel, smell or possess a service before they buy it. Because of intangibility of a service it is more difficult for a potential customer to examine fully a service before purchase. Therefore service supply involves a greater degree of trust than the supply of goods and consequently regulations often seek to ensure that service delivery meets specifications.

Because of this characteristic it is difficult for consumers to evaluate, it is difficult for marketers to advertise and prices are difficult to set. It is also not possible to protect services by patents.

In order to offset the challenges posed by intangibility, marketers have to use marketing strategies different from those used on products. One of the strategies that can be implemented is the use of tangible cues / physical evidence in order to give customer a basis to evaluate the service before consumption. For instance quality of furniture in a lawyer’s office or personnel appearance, 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.

Another strategy that makes the advertising of services easier is through word of mouth advertising. This gives potential customers to get more information about a service before consumption.

 There is no cost of goods sold in service production. The primary cost of producing a service is labour. One way that can be used to offset the challenge cause by intangibility on pricing of a service is the creation of a good organizational image which can then be used to assist in the pricing of the organisation’s services.  A well known and respected corporate image lowers the level of perceived risk experienced by potential customers and in some instances lowers the reliance on personal sources of information when making service provider choices. For example Econet wireless has managed to create a strong organizational image which helps in the marketing of its services.

INSEPARABILITY

This is a distinguishing characteristic of services that reflects the interconnection among the service provider, the customer involved in receiving the service and other customers sharing the service experience. This characteristic normally applies for the HIP services where the customer has to be physically present. For instance, when a customer is getting a hair do. 

There is physical connection of the service provider to the service. Because of the intangibility nature of services, the service provider becomes a tangible clue on which at least part of the customer’s evaluation of the service experience becomes based. As tangible clues, service providers are evaluated based on their use of language, clothing, personal hygiene and interpersonal communication skills.

Face to face interactions with customers makes employees satisfaction crucial. Without a doubt, employee satisfaction and customer satisfaction are directly related. As a result employees should be treated as internal customers of the firm.

There is involvement of the customer in the production process. Unlike goods which are produced, sold then consumed, services are first sold then produced and consumed simultaneously.  As a result, service firms must first design their operations to accommodate the customer’s presence. This can be done through isolation of the technical core of the business from the consumer ,this strategy allows for consumer involvement but limits the customer’s direct impact on the firms operations.

Service providers also have to put emphasis on selecting and training public contact personnel. Since 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.

 Attempting to balance consumer needs with efficient operating procedures is a delicate art this is because it entails effectively managing different market segments with different needs within a single service environment. However, effective customer management can minimize this challenge. For example, separating smokers from non smokers in a restaurant will help create a conducive environment for different customer segments.

Last but not least providing delivery services may eliminate the need for many consumers to be physically present within a service factory, thereby increasing the firm’s operational efficiencies. As customer contact increase, the efficiency of the operation decreases. Customer’s involvement in the production process creates uncertainty in the scheduling of production

INCONSISTENCY

Services are heterogeneous which means that there are variations from one service transaction to the next. As a result standardization and quality control practiced in goods marketing are difficult to achieve.

A firm could produce the best product in the world, but if an employee is having a “bad day,” a customer’s perception may be adversely affected. This entails that services marketing is not just about the service being provided, there is more to the story.

 Interactive marketing means perceived service quality depends heavily on the quality of the buyer-seller interaction during the service encounter. In product marketing, product quality often depends little on how the product is obtained. But in services marketing, service quality depends on both the service deliverer and the quality of the delivery, especially in professional services. The customer judges quality not just on technical quality (for instance the success of the surgery) but also on its functional quality (whether the doctor showed concern and inspired confidence). Therefore professionals cannot assume that they will satisfy the customer simply by providing good technical service. They have to master interactive marketing skills or functions as well.

Customization can also be used 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.

Standardisation can also be used as a strategy. Variability in service production can be reduced through intensive training of providers and / or replacing human labour with machines (automation and system development), for example the use of ATMs effectively reduced inconsistency.

IN – INVENTORABILITY

Services can not be saved, their unused capacity cannot be reserved.  Inability to inventory creates profound difficulties for marketing services. When dealing with goods, the ability to create an inventory means that production and consumption of the goods can be separated in time and space. In other words a service is unlike a good that can be produced in one locality, Harare and transported for sale in Bulawayo.

Unlike the goods market in services firms marketing and operations constantly interact with each other because of the inability to inventory the product. In-inventorability may pose different types of challenges some of which are: higher demand than maximum available supply, higher demand than optimal supply level (in this case demand exceeds optimal supply level. The temptation is to accept the additional business, however, in many instances the firm’s personnel and operations are not up to the task of delivering service effectively beyond optimal demand levels) and lower levels than optimal supply level.

A number of strategies can be implemented in the marketing and management framework of services in order to offset the above mentioned problems. Strategies that can be used can be categorized into 2, demand and supply strategies.

Demand Strategies

Creative pricing strategies  are often used by service firms to help smooth demand fluctuations such as offering “matinee” prices or “early bird specials” to shift demand from peak to non peak periods. For instances hotels can charge slightly lower prices during off peak periods and higher prices during peak periods like holidays.

Reservation systems can also be used in order to help the service provider to prepare in advance for a known quantity of demand. This helps reduce time spent waiting in line and the risk of not receiving the service. Complementary services are also used to minimize customer’s perceived waiting time for instance driving ranges at golf courses, arcades at movie theatres or reading material in the doctor’s office.

Supply Strategies

Service marketing is characterized by utilisation of part time employees in order to offset the perishable nature of services. Service marketing also implies the extensive use of technology in order to improve efficiency and increased customer participation for example the provision of salad and dessert bars in a restaurants.

However, it is quite clear that as much as services warrant their own marketing and management framework, services just like the goods market is basically rooted on the marketing concept. The main objective is customer satisfaction and that is the reason behind the unique strategies that marketerers have to come up with in service provision. Just like in goods marketing, services marketing also entail marketing research inspite of the distinct nature/ characteristics.

Another similarity with the goods market is that service marketing also makes use of the famous 4Ps and an additional 3Ps (people, physical evidence and process).  Lastly, the strategic marketing process applies to both services and goods marketing. 

CONCLUSION

The unique nature of services (i.e. intangibility, heterogeneity, perishability, simultaneity) serves as a backdrop to accentuate the competitive landscapes in the service sector. Because of the effects of intangibility, inseparability, heterogeneity and perishability, marketing plays a very different role in service-oriented organizations than it does in pure goods organizations. The invisible and visible part of the organization, the contact personnel and the physical environment, the organization and its customers and indeed the customers themselves are all bound together by a complex series of relationships. Consequently the marketing department must maintain a much closer relationship with the rest of the service organization than is customary in many goods businesses. The concept of the operations department being responsible for producing the product and the marketing department being responsible for selling it cannot work in a service firm.

BIBLIOGRAPHY

Baron S et al, 2^nd Edition

Hoffman K. D et al, 2^nd Edition