Introduction to Marketing Unit 5

Week 5/Unit 5

SERVICES MARKETING

Services refer to “activities, benefits and satisfactions, which are offered for sale or are provided in connection with the sale of goods” (American Marketing Association, Committee of Definitions 1960, p. 21). “Services include 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, timeliness, comfort or health) that are essentially intangible concerns of its first purchaser” (Quinn, Baruch and Paquette, 1987).

The life of services marketing has undergone three stages:

  • The Crawling Out stage (Pre-1980)

This was a period of high risk; if services marketing proved to have a case, the sub-discipline would grow but if it was shown that services marketing was a mere extension of goods marketing, the discipline would have no solid base and would disappear.

The objective was to prove the right of services marketing to exist.

  • The Scurrying About stage (1980-1985)

This stage saw a notable increase in the interest of practitioners and academics in the case of services marketing. The debate on the uniqueness of services marketing was also partly won.

The objectives were to reinforce, even further, the argument that, despite similarities, the marketing of services necessitated a different management approach, and to prove empirically the necessity of this.

The outcomes of this were;

  • A significant growth of the empirically based knowledge on the special nature of services.
  • Service quality
  • Service encounters (the customer-seller dyadic interaction at the point of sale).
  • Service design
  • New service development

 

  • The Walking Erect stage (1986-today)

The debate from earlier stage is won.

The objective was to conduct empirical research in new areas of inquiry in services marketing.

The outcome:

  • The empirical orientation and rigorousness of research on services marketing increase
  • New areas of inquiry are empirically investigated
  • Customer retention
  • Relationship marketing
  • Green issues in services marketing
  • Branding services
  • Internationalization of services
  • Direct services marketing
  • Sponsorship in services
  • Franchising in services
  • Services marketing is a respected sub-discipline of marketing

Unique characteristics of services

  • Intangibility
  • Inseparability of production and consumption
  • Heterogeneity
  • Perishability

The Intangibility of Services            

It refers to the total lack or perception of a service’s characteristics before and (often) after it is performed. The term was first used in 1963 (Regan). It is the most radical characteristic of services from which the others emanate.

The Inseparability of Services

It refers to the simultaneous production and consumption of services. The production process of services has been called “servuction” process (Eiglier and Langeard, 1977). The customer is present when the service is produced. The customer plays a role in the servuction and the delivery process. Customers interact with one another during the servuction process and may be affected (positively or negatively) by this interaction. The following can also be noted from the inseparability of services:

  • Mass production of services is difficult, if possible at all.
  • No significant economies can be earned from centralization of operations, since the service must be produced at the convenience of customers (temporal and physical).
  • Service quality depends highly on what happens in real time, i.e., during the service encounter.
  • Since customers have a vital role in the service and delivery process, the service provider needs great skills to train them how to play their role.
  • The service provider must prove excellence each time the service is produced.
  • The service provider needs skills in order to tackle disruptions in the service process, caused by problem customers.

The Heterogeneity of Services

The heterogeneity of services refers to the potential for high variability in the performance and the quality of services, caused by the interaction between the service employee and the customer. The performance of the employees delivering one same service varies:

  • Between different hour zones of the day
  • From employee to employee
  • From service company to service company

Not all customers play their role at the service encounter in a homogenous and predictable way. Heterogeneity is particularly the case with labour intensive and high-contact services. Heterogeneity is less visible in technology-based services

The Perishability of Services

The perishability of services refers to the fact that services cannot be saved, stored, resold or returned. It also includes the:

  • Difficulties in synchronizing supply and demand for services
  • Marketing implications for service.
  • Need for developing an accurate possible demand forecasting mechanism
  • Need for a creative plan for capacity utilization
  • Need for the implementation of strategies and actions to accommodate malcontent customers from non-returnable services

Strategic Classification of Services

Services can be strategically classified according to the following five dimensions (Lovelock, 1983):

  1. What is the nature of the service act?
  2. What type of relationship does the service organization have with its customers?
  • How much room is there for customization and judgment from the service provider?
  1. What is the nature of demand and supply for the service?
  2. How is the service delivered?

The Service Industry

The following comprise activities included in the service industry:

 
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