The nature and distinctive characteristics of services warrant their own marketing and management framework. Discuss

A service is any act or performance that one party can offer to another that is essentially intangible and does not result in the ownership of anything (Kotler, 2000). There are four main characteristics of services which are intangibility, inseparability, inconsistence and in-inventorability. These aspects affect the design of the marketing management framework.

One of the distinctive characteristics of service is intangibility which means unlike with goods they cannot be smelled, felt, heard, seen or tasted. This tends to increase perceived financial and psychological risk to customers together with the fact that services are low in search qualities and high in experience and credence qualities. The risk is further increased in high contact services where a service is performed on the human mind or body.

It is the duty of the service marketer to tangibilize the intangible through the physical evidence. Customers normally make inferences from the equipment, people and printed materials to reduce uncertainty. As many authors agree, also important as a factor influencing consumer satisfaction with a service is the physical setting within which it occurs (Bessom and Jackson, 1975; Lovelock, 1979; Shostack, 1977; Bateson, 1979).The closer the interaction between the customer and the service organization (High involvement purchase), the more likely service personnel, equipment and brochures are to form an important part of the service evaluation. Chevron Zimbabwe has modern buildings, fuel-like liquid flowing all year round at the entrance (signifying availability of fuel), modern computers, good air conditioning, clearly positioned marquee and signage symbolizing transparency in dealing.  However it should be noted that since inferences are drawn from the appearance of the equipment and people around, the environment should not overstate what a firm can provide. Marketers should transform physical evidence into concrete benefits.

Related articles:
1. Explain in detail, why creativity and innovation are critical traits of a successful entrepreneur.

2. Strength and weaknesses of the First Direct bank_Swot analysis

3. What is a Balanced Scorecard?

Another duty of the service marketer is to stimulate personal influence sources such as word of mouth which is normally an non-paid form advertising. This is where satisfied or delighted customers are encouraged by the service firm to give testimonials to their friends. In this case celebrities or opinion leaders are used. This is the most common form of promotion used in services which differ from the products market.  

Another of the characteristics is inseparability which arises because production and consumption of service is simultaneous. In goods market the marketing firm tries to produce a best product “as defined by consumers” but in the services marketing, the customer has to actively participate as he/she determines the ultimate quality (process quality). Goffman came up with the dramaturgy of service encounter where all players read from their script. This implies that customers should know their roles. A patient who wants his tooth removed by a dentist would find the service unsatisfactory if the doctor never disclosed that he will have some pain three days after. But when the patient is told, he knows what to expect from a service and make the service process enjoyable.

Marketers should strive to create performance teams which Goffman defined as a set of individuals who cooperate to create a single definition of reality (Goffman, 1959,p, 79). Inseparability also comes because some services are co-consumed meaning that they are enjoyed in the company of others such as soccer or a movie. A group of customers in the theatre making noise can impinge on the enjoyment of others who might want to follow a film. In order to avoid customer defection, it is important to educate customers of their roles and help others contribute to the enjoyment of a service. Management has to ensure that service employees are aware of their roles through training and motivation who in turn educate customers of what to expect.

The marketing department is normally interested in increasing the market share, it s the inseparability nature of services which makes the growth of a service difficult. In the goods market more distributors and resellers can be used (the place component). Because the buyer and the seller have to meet in services, that is, production and marketing cannot be separated; it is difficult for a doctor to attend to say five people at a time. The implications on marketing management is that staff has to be trained to interact effectively with clients, look for ways to prevent other customers from disturbing others. 

In-inventorability referred to as perishability by some text books explains the fact that services can not be stored. When a bus leaves for Harare half empty, the seats can not be sold in the future. If demand for a company services are stable, then perishability is not a problem. But because in most (if not all) service industries multiple factors affect demand which can cause cyclical, random or seasonal fluctuations. In the goods market, goods can be manufactured in bulk, inventoried and sold during the festive seasons where demand is high.

The in-inventorability nature of service calls upon the service organization to manage demand and capacity. To match fluctuating demand, down time can be scheduled during periods of low demand to avoid breakdowns during peak periods, using part time employees in services such as the bank or supermarkets where demand sky rocket during festive seasons. Alternatively a firm may rent or share extra facilities and equipment to avoid over investment in assets. A theatre company can rent or hire part of its premises during the week when their demand is low to companies who might need to conduct seminars. Employees can be cross trained so that during peak times, some can assist frontline personnel as an example in banks or help back office personnel to balance off books during periods of low demand.

In managing demand, the service firm has to understand patterns and determinants of demand by answering the following questions: does the demand for the service follow a regular and predictable cycle? What are underlying causes of these cyclical demand variations? Can demand for a particular service over time be disaggregated by market segment to reflect such support as user patterns and variations in net profitability of each completed transaction?  

Differential pricing where a company charges low prices during off-peak periods to switch demand from peak periods is the most common pricing strategy used to manage demand. Econet wireless normally uses this strategy where it charges low tariffs between 6 p.m and 6 a.m to encourage calls during this period. Complementary services can also be used where say in a bank, cheque deposit boxes are set aside for those who might be in a rush. The cheques will be cleared during periods of low demand. In the transport and entertainment services, reservations are on an increase where customers can book in advance. This allows the service organization to plan in advance with decisions such as to use either a 30-seater bus or 75-seater.

Other strategies available for a marketer are modifying the timing and location of delivery. A car rental company can establish branch offices in resort communities. Communication efforts can be made to encourage customers to use the service at different times.

Inconsistency is inevitable because a service depends with who provides it, when and where. The quality of service depends also with the state of mind of the service provider.

Service blue printing which is flowcharting the processes involved in the service process. A service blue print shows potential fail points and helps come up with solutions. A detailed service flow chart shows time frames within which each service has to be performed. It further shows relationships between the front and back office. As a result, employees must then be trained and motivated to perform their tasks within the established time frames in the sequence laid down in the service blue print. This is in a move to try and improve consistency in service provision. Furthermore, a service blue print is used to measure process quality as it serves as a referral point of what is supposed to be done, within what time frame.

Inconsistency is prevalent in high people oriented services unlike in high equipment services where most services are standardized. A similar health problem can be treated / handled differently by the same doctor but with an ATM (automated-tailor machine), transactions are treated similarly. Hence standardization can be used as a solution to try and reduce inconsistency. Also, inconsistency can be turned into an advantage by emphasizing how staff tailor or customize their service to each customer’s needs.