Marketing of Services

Differentiate services from goods.

      The American Marketing Association has defined services as follows:

      Services are products . . . that are intangible, or at least substantial. so. If totally intangible, they are exchanged directly from producer to user, cannot be transported or stored, and are almost instantly perishable. Service products are often difficult to identify, since they come into existence at the

same time they are bought and consumed. They are composed of intangible elements that are inseparable, they usually involve customer partition in some important way, cannot be sold in the sense of ownership transfer, and have no title.

      Contemporary Marketing generalizes this lengthy definition: Services are intangible tasks that satisfy consumer and industrial user needs. Many products have both goods and services components. A continuum from pure services to pure goods is useful in visualizing the differences and similarities between goods and services.

Identify the primary characteristics of services.

      Six key elements of services have marketing implications: &- intangibility, inseparability from the provider, perishability, difficulty in standardization, buyer involvement in the development and distribution of services, and great variability in quality.

Explain the concept of service quality.

      Service quality refers to the expected and perceived qualities of a service offering. Gaps can exist between expected service quality and perceived service quality. These gaps can be favorable or unfavorable. Service quality is the major determinant of consumer satisfaction or dissatisfaction. Five factors are involved in the level of service quality: tangibles (physical evidence of the service); reliability (consistency of service performance and dependability) &- responsiveness (willingness and readiness of employees to provide service); assurance (confidence communicated by the service provider); and empathy (the service provider's efforts to understand the customer's needs and then individualize the service delivery).

Outline the possible outcomes of a service encounter.

      A service encounter is the actual interaction point between the customer and the service provider. The outcomes of service encounters fall into three categories: word&-of&-mouth, service switching, and service loyalty.

Develop a classification for services.

      Services can be categorized in a variety of ways. One classification system first determines whether the service is equipment&-based or people&-based. The second level of classification is based on the skill levels required. Still another system uses a series of five questions concerning the nature of the service, the relationship between the service organization and customer, the degree of customization, the demand and supply influences, and the method of service delivery.

Explain how environmental factors affect services.

      The economic, social&-cultural, political&-legal, technological, and competitive environments have a profound impact on services in the following ways:

      A. The economic environment has spurred the rapid growth of the service sector.

      B. The social&-cultural environment creates changes in consumer tastes for services over time.

      C. The political&-legal environment involves closer regulation of many service firms than good producers.

      D. The technological environment produces innovations that lead to increased productivity in the service sector.

      E. The competitive environment for services sometimes comes from goods producers or the government rather than other services.

Discuss market segmentation and the marketing mix for services.

      Service marketers can use all four approaches to segmentation: geographic, demographic, psychographic, and benefit segmentation. However, demographic segmentation is the favorite option. The marketing mix for services often differs from that for goods. For example, the intangible nature of services makes it difficult to use some approaches to product strategy such as packaging, labeling, and sampling. Pricing strategy is crucial for service providers. Demand and supply have to be considered. Extensive negotiations are commonplace for professional services. In regard to distribution strategy, service channels are usually simpler and more direct than channels for goods. Finally, promotional strategy tries to do the following: tangibilize the service; create a favorable image for the service or the service firm; and demonstrate the tangible benefits of an intangible service.