Strategic Services Marketing

Answer: The definition of service is “any intangible product, which is essentially a transaction and is transferred from the buyer to the seller in exchange for some consideration (or no consideration). Let us take a look at some of the characteristics of a service.

Intangibility: A service is not a physical product that you can touch or see. A service can be experienced by the buyer or the receiver. Also, you cannot judge the quality of the service before consumption.

Inconsistency: There can be no perfect standardization of services. Even if the service provider remains the same, the quality of the service may differ from time to time.

Inseparability: One unique characteristic of services is that the service and the service provider cannot be separated. Unlike with goods/products the manufacturing and the consumption of services cannot be separated by storage.

Storage: The production and consumption of services are not inseparable because storage of services is not possible. Being an intangible transaction there can never be an inventory of services.

The goods and services continuum enables marketers to see the relative goods/services composition of total products. A product’s position on the continuum, in turn, enables marketers to spot opportunities. At the pure goods end of the continuum, goods that have no related services are positioned. At the pure services end are services that are not associated with physical products. Products that are a combination of goods and services fall between the two ends. For example, goods such as furnaces, which require accompanying services such as delivery and installation, are situated toward the pure goods end. Products that involve the sale of both goods and services, such as auto repair, are near the center. And products that are primarily services but rely on physical equipment, such as taxis, are located toward the pure services end.

A few observations of the Continuum model can be made:

– The offerings of a firm range from pure goods to pure services.

– Those that are mostly goods are tangible and are very easy to evaluate by the consumer (like fabrics, jewellery, a house etc.). A consumer finds it very difficult to evaluate those offers which are mostly services because of their intangibility (like legal and counselling advice, medical diagnosis etc).

– The range of offers has different qualities in themselves and the customer looks for or seeks these qualities:

1) Classification of service based on tangible action

Wherever people or products are involved directly, the service classification can be done based on tangibility.

a) Services for people – Like Health care, restaurants and saloons, where the service is delivered by people to people.

b) Services for goods – Like transportation, repair and maintenance and others. Where services are given by people for objects or goods.

2) Classification of services based on intangibility

There are objects in this world which cannot be tangibly quantified. For example – the number of algorithms it takes to execute your banking order correctly, or the value of your life which is forecasted by insurance agents. These services are classified on the basis of intangibility.

a) Services directed at people’s mind – Services sold through influencing the creativity of humans are classified on the basis of intangibility.

b) Services directed at intangible assets – Banking, legal services, and insurance services are some of the services most difficult to price and quantify.

A more general classification of services based on the type of function that is provided through them can be as follows:

1.   Business services.

2.   Communication services.

3.   Construction and related engineering services.

4.   Distribution services.

5.   Educational services.

6.   Environmental services.

7.   Financial services.

8.   Health-related and social services.

9.   Tourism and travel-related services.

10.   Recreational, cultural, and sporting services.

11.   Transport services.

12.   Other services not included elsewhere

The service marketing triangle is a framework that defines relationships with companies, their customers, their vendors and their systems. It's a way to show companies how these several components can affect each other. This method of understanding these relationships is common in the service industry and can determine where companies might direct their marketing efforts. Here are three main ways service companies use marketing to reach their business goals after analyzing their service marketing triangle

Interactive marketing

Interactive marketing is a way to target individuals both within a company and outside a company. This means the company can respond directly to actions that customers take to create a more personalized experience and sell its services. When customers act a certain way, like if they click on an advertisement, a company may send email marketing or promote specific products to leverage the customer's engagement and turn it into a sale.

Internal marketing

Internal marketing is when companies use certain strategies to appeal to their employees. Companies often use internal marketing to promote their business goals or to help employees learn more about its mission and values. Internal marketing can promote employee engagement through this type of marketing with the goal that employees feel like they can contribute to their overall goals or align their values with those of the company.

External marketing

External marketing is the traditional type of marketing where companies create promotions and materials to help sell their services. This includes creating and maintaining a brand that customers recognize and promoting advertisements to appeal to customers. External marketing requires several tools like social sites, partnerships and company elements, like a logo and website.

There are several key advantages of the service marketing triangle. It can show companies how these different marketing initiatives and relationships can affect one another. For example, if a company can successfully market its mission and values to its employees, the employees then might be more likely to be successful in providing positive services to individual customers. This creates another advantage where companies might increase their revenue or profits.

It also helps companies specifically target unique groups of people to create a company with a shared value. Understanding the difference between how a customer interacts with a company and how they interact with an employee can help establish marketing techniques that can be more effective in reaching business goals.

There are six main elements in a service marketing triangle:

• Customers: Customers are those people that buy the products or engage with marketing materials. These can affect how a company adjusts its external marketing or personalized efforts to sell more services.

• Employees: Employees are the people within the company turning marketing initiatives into sales. They often use interactive marketing to respond to specific customer requests or they receive internal marketing efforts from the company.

• Company: The company is the overall business and the marketing efforts they perform. This element typically creates the internal and external marketing strategies that which customers and employees interact.

In a general scenario, we’ve got five main factors that determine consumer behavior, i.e these factors regulate if a target customer purchases a product or not. These factors are namely Psychological, Social, Cultural, Personal, and Economic factors. 

1. Psychological Factors

Interestingly, human psychology is actually an integral factor that influences consumer behavior although these factors aren’t exactly easy to measure. A few integral psychological factors driving the behavior of consumers are : 

·         Motivation

Motivation actually becomes a considerable defining factor influencing a person’s buying behavior. A popular motivation theory is Maslow's theory of hierarchy of needs in which he developed a model that lays the foundation for 5 different levels of human needs where he lays the base with psychological needs and moves on to safety needs, social needs, esteem needs and finally heading to self-actualization needs. Amongst these requirements, our basic requirements and security needs are generally put above all needs.  

For instance, The U.S. Army’s famous “Be All You Can Be” slogan and advertising campaigns encouraged young adults to join the army (self-actualization). 

·         Perception

Our perception is shaped when we gather information regarding a product and examine it to generate a relevant image regarding a certain product.  

Whenever we see an advertisement, review, feedback or promotion regarding a product, we form an image of that item. As a result, our perception plays an integral role in shaping our purchasing decisions. 

·         Learning

Every time we purchase a product we get a deeper knowledge about it through experience. This learning mainly depends on our experience, knowledge, and skills. This learning can either be cognitive or conditional. While in cognitive learning, we use our knowledge for finding satisfaction and fulfilling his needs with the item we purchase, conditional learning is where we get constantly exposed to a situation, enabling us to respond towards it. 

·         Attitudes and Beliefs

We’ve all got certain attitudes or beliefs that consciously or subconsciously prompt our purchasing decisions. For instance, while your friend who believes caffeine is adverse for one’s health may prefer tea, you who believe that caffeine energizes us, may prefer coffee. Our attitude and what we believe influence our behavior towards a product and also play a key role in shaping the product’s brand image. So understanding a consumer’s attitude and belief becomes useful for marketers to design their marketing campaigns.

2. Social Factors

  We are all social animals so of course our purchasing decisions are impacted to some extent by the people around. We are constantly working on imitating other human beings, longing to fit in our surroundings. As a result social factors influence our buying behavior regarding items. Some of these factors include : 

·         Family

Our families actually have a considerable role to play in impacting our purchasing behavior. We form an inclination or aversion towards certain products from our childhood by observing our families use that product and persist in using those products as we grow up.

For instance, if our family members are fond of Papa Jones, we would subconsciously end up choosing Papa Jones over say, Pizza Hut or Domino’s.

·         Reference Groups

Reference groups are basically groups of people with whom we associate ourselves. These include clubs, schools, professional or playgroups, churches, and even acquaintances or a group of friends, etc. The people in the reference groups normally have a common pattern of purchasing and an opinion leader who influences them in terms of their buying behavior. 

·         Roles and status

We are all of course influenced by the role that we hold in society. The higher position we hold, the more our status affects what and how much we purchase. For instance, the CEO of a company and a normal employee would have a varied buying pattern.

3. Cultural factors

  We all have our values and ideologies that are shaped by the values and ideologies of the society we exist in and the community we belong to. Our behavior is consciously or subconsciously driven by the culture followed by that particular community. 

A few significant cultural factors include : 

·         Culture

Our cultural factors are basically basic requirements, values, wants behaviors, and preferences that are observed and absorbed by us from our close family members as well as other significant people around us.

·         Subculture

Amongst a cultural group, we have several subcultures. These groups share a common set of values and beliefs. They can consist of people from varied nationalities, religions, caste, and geographies.  An entire customer segment is formed by this customer segment. 

·         Social Class

Each society all over the globe is defined and known by some form of social class. This social class is determined collectively by our family backgrounds, occupation, education, and residence location. Our social class is another component holding the reins for consumer behavior.

4. Personal Factors

  Alongside social, psychological, and cultural factors, we all have factors that are personal to us that influence our choices. These factors vary from person to person, introducing varied perceptions and behavior.

 Some of these personal factors include: 

•      Age

Age is one of the primary factors that impact our preferences. The vibrant and flashy purchasing choices of a teenager would obviously differ from what an elderly person purchases. Meanwhile, we have middle-aged people who are naturally more focused on purchasing properties, houses, or vehicles. 

·         Income

Our income definitely impacts our purchasing behavior. The higher our income, the more purchasing power we hold and vice versa. Higher disposable income compels us to spend more on luxurious items while a lower or mediocre income makes us spend more on our basic needs like education, groceries, and clothing. 

·         Occupation

Our occupation largely steers our purchasing decision making. We all tend to purchase the items that are relevant or suitable for our profession. For instance, a businessman would have a different clothes purchasing pattern in comparison to an artist. 

·         Lifestyle

Our way of life is one of the most powerful influencers that controls our choices. Our lifestyle dominates our buying behavior quite significantly. Suppose we are on a diet then the products we purchase will also complement our diet, from food, weighing scale to using protein. 

5. Economic Factors

The purchasing quirks and decisions of the consumer largely rely upon the market or nation’s economic circumstances. The more that a nation is prosperous and its economy stable, the larger will be the money supply of the market and the consumer’s purchasing power.  

A strong, healthy economy brings purchasing confidence while a weak economy reveals a strained market, marked by a weakened purchasing power and unemployment. 

Some significant economic factors include:

·         Personal Income:

Our personal income is the criteria that dictate the level of money we will spend on buying goods or services. There are primarily two kinds of personal incomes that a consumer has namely disposable income and discretionary income.

·         Family Income:

Our family income is actually an aggregate of the sum total of the income of all our family members. This income also plays a considerable role in driving consumer behavior. The income that remains after meeting all the basic life necessities is what is then used for buying various goods, branded items, luxuries, durables, etc. 

·         Income Expectations:

It's not just our personal and family income that impacts our buying behavior, our future income expectations also have a role to play. For instance, if we expect our income to rise in the future, we would naturally spend a greater amount of money in purchasing items. And of course, in case we expect our income to take a plunge in the near future, it would have a negative influence on our expenditure. 

·         Consumer Credit:

The credit facilities at our behest also impact our purchasing behavior. This credit is normally provided by sellers, either directly or indirectly via banks or financial institutions. If we have flexible credit terms as well as accessible EMI schemes, our expenditure on items is likely to increase and in less flexible credit terms would result in the opposite. 

·         Liquid Assets:

Even the liquid assets we’ve maintained influence our purchasing behavior. In case you are wondering, these are the assets that get promptly converted into cash such as stocks, mutual funds, our savings or current accounts. If we have more liquid assets, there is a greater likelihood of us spending more on luxuries and shopping items. Lesser liquid assets meanwhile result in lesser expenditure on these items.

·         Savings:

The savings generated from our personal income are also regulating our buying behavior. For instance, if we take the decision of saving more from our income for a certain period of time, our expenditure on goods and services would be lesser and for that period and if we wish to save less, our expenditure on such items would increase. 

The gap model of service quality is a framework professionals use to analyze customer satisfaction and identify areas for improvement. Most companies, regardless of whether they are sales- or service-focused, involve some component of customer service. Some industries that use this tool include retail, food, hospitality and health care.

Also known as the five gaps model or the customer service gap model, this tool addresses the most common communication challenges that can cause a gap between customers' expectations of service and the service they actually receive. The model also helps managers better understand their customers to meet their needs.

5 types of gaps

The gap model of service quality addresses five gaps that the framework addresses. Each gap is a difference between an expectation and a deliverable. The five gaps that the framework examines are:

1. Gap between management perception and customer expectation

This gap measures what customers expect and what management thinks they want. This can occur when management doesn't have enough information about their customers' expectations. For example, managers at a supermarket may think shoppers want more brand-name items and self-checkout stations. However, shoppers are more concerned about the store's cleanliness and employee friendliness.

Market research and feedback can help you better understand your customers before you make significant changes to your products or services. Consider hosting customer panels and interviews, implementing satisfaction surveys or conducting comprehensive studies to ensure your perception of what your customers want is correct.

2. Gap between management perception and service quality specification

This gap examines the difference between management's perception of quality service and the steps it takes to provide that level of service. Managers may understand what their customers expect but haven't established the necessary training or standards to meet these expectations. For example, managers at a fast-food restaurant may tell staff members to fill orders quickly without specifying the acceptable amount of time.

3. Gap between service quality specification and service delivery

This gap assesses the difference between what level of service management tells expects from staff and what type of service the customer actually receives. Customers may receive lower-quality service than managers want if team members can't meet expectations. At this stage, managers might audit the customer experience to identify areas for improvement. Often, in this type of situation, the team may benefit from receiving additional training. In some situations, management may need to review their hiring practices to select both capable and willing candidates to provide quality customer service.

4. Gap between service delivery and external communication

This gap analyzes the difference between the service a company tells customers it provides and the service they actually receive. It measures whether the company advertises and shares information about its services accurately instead of exaggerating its claims. Advertisements and company statements significantly impact customer expectations, so managers need to ensure claims are honest.

For example, a hotel's website and brochures might feature clean and modern-looking rooms, but if the staff doesn't properly maintain the rooms between guests, there may be a gap between what customers expect and what they receive. Reviewing advertising materials regularly can help you accurately depict the services you provide customers.

5. Gap between expected service and experienced service

This gap addresses the difference between the level of service customers expect and the level they perceive. This can occur when the company's claims are honest but misinterpreted by the customer. Interactions with other customers and previous experiences with your company may also influence the type of experience that customers expect.

For example, a sales associate at a boutique clothing store may welcome guests, ask if they need help finding anything, offer to prepare a dressing room and check on them to ensure the clothes fit properly. While the sales associate may be providing the company's expected quality of service, customers may perceive this service as overwhelming based on experiences shopping at other stores. Collecting regular customer feedback can help you identify this gap. Consider implementing transactional surveys to assess how customers perceive the quality of the service they receive.