Services Marketing

Services marketing has incurred an explosive amount of scholarly research in the last 20 years, however since 1986 there has been no debate concerning the notion that services are distinct from products, and thus deserve a special approach, a set of concepts and a body of knowledge (Brown, Fisk, & Bitner, 1994). This essay will explain the distinguishing features of services marketing, giving examples where possible. It will begin by defining services marketing and giving some background knowledge on its divergence from product marketing. It will then examine the four characteristics of services, and then finish with an explanation of the extra P’s found in the services marketing mix.

In the last century there has been a large shift in marketing thought; evolving from a goods-dominated view, in which tangible output and discrete transactions were the focus, to a service-dominant view, in which intangibility, exchange processes, and relationships are central (Vargo & Lusch, 2004). Vargo and Lusch define services as the application of specialized competences (knowledge and skills) through deeds, processes, and performances for the benefit of another entity or the entity itself. Four idiosyncratic features of services will now be given, highlighting why services marketing is different from basic product marketing.

Arguably the most distinguishing feature about services is their intangibility. Services are defined in (Zeithaml, Bitner, & Gremler, 2006) as “deeds, processes, and performances”. None of these are physical objects in which a customer can take ownership of, even though during a service physical evidence will be apparent in the form of things like medicine the doctors prescribes to you, the photo taken of you riding the rollercoaster, or the food on your plate in a restaurant. This invisibility creates a number of issues for marketers. Firstly there is no stock, making it hard to manage supply and demand. Secondly services cannot be shown or displayed to customers, making it hard for marketers to advertise the quality of the service. And finally, because services don’t physically exist, there is difficulty in patenting them, making it easy for other firms to copy your service.

Another notable aspect about products is that on average they stay the same. If you buy a Ford Focus here in Australia, and then go and buy the same model in America, chances are they will both be exactly the same. Services are different in that they are heterogeneous, meaning they differ with each use. For example a wildlife tour will never be the same twice, not only because of the random and unpredictable nature of the animals, but the guide may be in a different mood, the weather will have changed, and there will be different customers each time. These factors make it harder to consistently give quality service, which is important to marketers because customers will have a particular set of expectations in mind, based primarily on what was promoted in the service and previous experiences in the particular industry.

Another distinguishable feature about services is the fact that it’s both produced and consumed at the same time, as opposed to products where customers do not see how the product is manufactured. A good metaphor for this is being at the theatre. Consumers can be compared to an audience, where they watch actors (employees) perform on stage (physical location like a business store) amongst props (physical objects like chairs, tables, pot plants etc). The actors are ‘live’ and performing (producing) at the same time as the audience are watching (consuming). This brings us to the concept of interactive marketing. In a service, operational staff carries out much of the marketing function (Klassen, Russel, & Chrisman, 1998), and marketers are left to the advertising and promotion.

The final distinction that differentiates services from products is their perishability. While some products perish very quickly (like water balloons), services simply cannot be stored, saved, resold or returned at all. Marketers main concern would be the procedure for when things do not go as planned. Customers cannot simply return the service and ask for another one; it is up to the service provider to offer the customer some kind of compensation. If passengers are forced to wait a long time for their flight, employees could provide free coffee and refreshments while they wait, in an attempt to make up for their failing service.

With product marketing the marketing mix includes the four P’s; product, price, place and promotion. Services use the same elements plus three more to help account for their unique nature.

Firstly there is people, which comprise of everyone that influences the buyer’s perceptions, including the buyer themselves. Customers have an active role in the production, and thus can influence the outcome of their own service or the service of others. For example a large family with screaming children interrupting a young couples romantic dinner at a restaurant.

Every person is important to the marketer, no matter how small their role may be. Consider an IT professional who installs computers in people’s homes. During that installation the buyer may form an opinion of the service provider as a whole based purely on that IT professionals performance. Sometimes a person is the sole service provider, for example a dentist or lawyer, making their performance and appearance critical to gaining a high perceived quality of service.

The sixth ‘P’ is physical evidence, which is the environment in which the service is delivered and where the firm and customer interact (Zeithaml, Bitner, & Gremler, 2006). It also includes any physical objects that assist in the delivery of the service. (Lehtinen & Lehtinen, 1991) define it as the environment and its instruments. With some services customers may find it hard to judge the quality of the service, especially with credence service’s like financial advisors or legal advice. It is crucial that marketing managers address consumer fears regarding risk that results before, during, and after consumption of credence services (Keh & Sun, 2008). Since the customer does not have the knowledge or experience to judge the actual service, they instead turn their attention to other things, including the physical evidence of service quality. This would usually come in the form of a professional looking workspace, however would change with each service provider. For example in a doctors surgery cleanliness would be expected.

Finally there is the service process, including the procedures, mechanisms and flow of activities by which the service is delivered (Zeithaml, Bitner, & Gremler, 2006). When purchasing a service, customers often have a set of expectations of the process of the service, and when these are not met, the perceived quality of service drops. For example in white water rafting a customer might be dissatisfied if, when they arrived, they were told they had to carry the raft to the top of the river first. The process is important because people participate in it, unlike products, where the process is behind doors.

Services represent at least 70% of the nation’s total GDP for at least 5 countries, including the United Kingdom and Australia, making it a hot topic for not only marketers, but anyone competing in the business world. Services are distinguished from products by four characteristics; intangibility, they are heterogeneous, there is simultaneous production and consumption, and their perishability. Services marketing differs from product marketing from the fact that three extra P’s are added to the original marketing mix; people, physical evidence and process.