Evolution of Service Marketing
As an academic field, service marketing has been in existence from few past decades. Fisk, Brown and Bitner (1993) studied the service marketing literature from its nascent stage in 1953 to its maturity in 1993.They divided this evolution into three stages-
- Crawling Out (1953–1979)- In the first stage, researchers studied and discussed whether this discipline deserves a separate place in literature (Swartz, Bowen & Brown., 1992). The researchers started debating how good and services differ from each other in this this stage.
- Scurrying About (1980–1985)- Later in the stage of ‘Scurrying About’, the focus was on inference of the difference between goods and services. In his attempt to classify services into different types, Lovelock (1983) noted that there is “too much emphasis on drawing distinctions between goods marketing and services marketing and not enough on developing good insights for marketing practices in the service sector”.
- Walking Erect (1986–1993- The ‘Walking Erect’ stage established the existence of services marketing as a distinct field. During the last decade of 20th century, the focus of the literature shifted to various aspects of services such as service quality, service experience, managing demand and supply gap in services, increasing tangibility of intangible service processes, role of technology in service processes etc. (Anuradha malik, 2017)
What is service marketing?
Put in the simplest terms services are deeds, processes, and performance provided or coproduced by one entity or person for another entity or person. Defining it “all economic activities whose output is not a physical product or construction, is generally consumed at the time it is produced, and provides added value in forms (such as convenience, amusement, timelines, comfort, or health) that are essentially intangible concerns of its first purchaser.”
A business that offers a set of different and various services to customers, whether it is in hospitality, travel, healthcare or professional services like a lawyer, engineer, architect etc., is part of the service industry and offers its skills and technology to the end-users or other businesses. If the business directly interacts with the consumer, then it falls under the business-to-consumer (B2C) service category; whereas, if the business offers its services to other businesses, it falls under the business-to-business (B2B) services. Whatever the kind of services your business offers, you need a marketing plan to promote it and create the right service marketing mix to communicate your offerings to your audience. This course can help get started on creating a marketing plan for your business.
Any method that can communicate a service’s appeal and benefits to customers is a valid approach, including informational content, promotional deals, advertisements, and many other kinds of marketing materials.
While product marketing involves tangible goods that can be seen, heard, felt, smelt or tasted by the consumers, service marketing highlights on performance, process, customer value and benefits to the end-users. So, whether you are a service executive in a large firm or the owner of a small services company, it is imperative for you to understand the various aspects of service marketing and creating the right mix of promotional tools and methods. We will be touching upon these various factors and more in our discussion here. (Richa, 2014)
Key Characteristics of Services
Grönroos (1991) highlighted that instead of creating perfect definition of services, researchers should focus on examining the characteristics of services. Some main characteristics of services are intangibility, heterogeneity, lack of ownership, inseparability, perishability, shorter supply chains etc. The most widely discussed characteristics in literature are intangibility, heterogeneity, inseparability and perishability, and are known as IHIP characteristics (Parry, Newnes & Huang, 2011).
Intangible: The term was first used in literature by Regan (1963). Services are not physical products. You cannot touch, see, touch or smell services. Since services are intangible in nature, it is difficult to gather information about them or compare various alternatives. The intangibility level varies from service to service. Heterogeneous: It is difficult to standardize services. Even if the same person is performing the service again and again, the service output tends to be heterogeneous in nature. Companies try to make their services more homogeneous and consistent by using standardized processes or through technological innovations. Inseparable: Services cannot be separated from source. Therefore, the role of service provider is very crucial in-service delivery. For example- In a hospital, the doctor is a part of the consultation service that is being provided to the patients. In contrast, goods are manufactured and distributed to whole-sellers/ retailers or other middlemen who then later on sell goods to consumers. Perishable: Usually, services are produced and consumed at the same time. A provider cannot manufacture their services and store them like goods. So, we cannot have an inventory of services. For example- A haircut or seat in airline cannot be stored. Perishability becomes a challenge for the service providers since it is difficult to regulate supply with changes in demand. Other Characteristics: There is lack of ownership in services. Payment for service doesn’t entitle a consumer to own a service. So, a consumer can use and can have access to a service but cannot own it. Services cannot be returned like goods. For example- If a consumer buys a defective TV set, he can return or exchange it, but he cannot return a haircut or a operation by a doctor. Usually, services are provided directly to the consumers and middlemen are generally not present in supply chain of services. Even when middlemen are involved, the supply chain is often limited to one or two intermediaries. (Anuradha malik, 2017)
Elements of Service Marketing Mix
Product – Unlike a product, a service is intangible and cannot be measured in terms of look, feel and other qualities present in a commodity. However, it can be customized to suit the user requirements and give a personal touch. However, the service product is heterogeneous and perishable in nature just like a normal product and needs to be designed with the utmost care to increase customer satisfaction. Master positioning your B2B services with this course. A product is something which satisfies the needs and wants of the customer. It is the actual item which is held for sale in the market. Product mix constitutes the combination of all the services for sale in the market.
For example, the product mix of a saloon will be a combination haircut service, manicure and pedicure service, facial, shaving etc.
The life cycle of services is same as that of a product as it starts from the day it was first thought until the time it is finally removed from the market.
Pricing – The pricing strategy for services is difficult to achieve unlike in products, wherein the final price depends on the raw materials, cost of production and distribution etc. However, in service pricing, you cannot measure the cost of the services you offer that easily. For example, in the education industry, how would you set the price of the quality of education imparted? Or if you are in the food and hospitality industry, how would you charge the customers for the care shown by the host or hostess, the ambience in the restaurant or the fine taste of your delicacies? Therefore, pricing plays a crucial role in the services marketing mix for your business. Learn how to price your service with confidence in this course.
Price is the amount which the customer pays for the product. But unlike goods pricing, pricing of services are a bit different and a bit difficult. Price of a service include the actual costs of goods used (if any), process costs (labour costs + overheads) and profits.
Just like goods, businesses can decide from one of these practices for pricing
- Penetration Pricing (low price kept to capture market share)
- Skimming Pricing (high price initially then lowering of price)
- Competition Pricing (pricing at par of competition)
Pricing decides the position of the product among the competition.
Place – The place where you choose to conduct your service business can make or break your organizational growth. You need to understand how visible your setup would be to potential customers and how frequently it would be visited by consumers. For example, would you set up a fast-food centre near a college or office hub, where students and professionals can quickly grab a bite or next to a big restaurant in a classy neighbourhood?
Place mix is deciding where and how the services will be available to the customers at the right time and at the right place to result in maximum advantage to the business.
Unlike goods, services cannot be separated from its provider and are provided where its provider is. But the same services can be performed by different providers (E.g. different franchise of the same saloon provide same services).
Promotion – The service industry usually has stiff competition across different verticals and your business would need a lot of promotions to pass on the right message to potential customers. While advertising, online and direct marketing are the best ways to promote your service you need to have a good mix of communication channels to address a larger audience.
A business has to convey about its offering and its USP to the customer. It is what keeps it alive in this competitive environment. The promotion mix decides the marketing communication techniques, strategies, and mediums used. The medium includes:
- Personal Selling
- Sales Promotion
- Public Relations
- Direct Marketing, and
- Social Media Outreach
People – Your business is not just built on your goals, company vision and principles but also depends heavily on your employees. It is the people who work for you who are responsible in creating happy and returning customers. People in your organization are the epicentre of the quality of your services and need to have the best of talents to gain customer loyalty and trust.
Services are inseparable from the provider. These providers form the people of the service marketing mix. For example, the chef in the restaurant, a banker in the bank, an air hostess in the flight, etc.
Companies spend much time in selecting and training their staff and every other person who represents the company to the customer.
Process – How efficiently your services are delivered to the customer is an important aspect of your service blueprint and you need to emphasize on setting up a process for doing so. You need to ask yourself “Do I want to have a process in place that is quick, reliable and easy to monitor or one that is sluggish but necessarily passes through several layers of hierarchy?” In today’s competitive world, companies are always in the race to deliver services quickly, efficiently and with the highest quality.
The actual mechanism involved in delivering a service is the process. It’s the route of the actual product from the provider to the user. For example, a bank has a definite process for its every operation (to deposit a cheque, to withdraw money, to change your address, etc.).
Since services are diverse, processes involved in carrying out those services are also diverse. Process can be involved in planning and/or in the execution. But it is always involved in carrying out a service.
Process results in uniformity. Hence the process is essential of the services marketing mix.
Physical Evidence – While offering your services, you can either do it without adding a personal touch or by differentiating your offerings by adding an element of delight to the customer. For example, would you prefer to visit a bookstore that only has a stack of books with a cashier nearby or one that also has a place to sit, where you can browse through the book you are interested in and enjoy the light music in the backdrop while you make a choice? The ambiance of a bookstore or restaurant, the music, the friendly face of your travel host etc. are all part of the physical evidence of a service and they are an important element of the service marketing mix.
The services sector has various kinds of businesses catering to the needs of individual consumers or bigger enterprises and larger businesses. Whatever industry domain you conduct your business in ensure to create the right service marketing mix for better customer satisfaction. This in-depth course can help you map out the proper marketing mix for your company.
Services are intangible. But they are often provided along with many tangible elements. Physical evidence includes the environment/place where the service is provided and any tangible elements that facilitate the performance or communication of the service. It’s the tangible part that is more or less complementary to the service. For example, a physical evidence mix of a premium saloon will include the staff’s uniform, a good ambiance created by playing nice music and spraying good room freshener, etc.