Developing Marketing Strategies For Services

As more and more products become standardized, organizations are bundling services with their products because they have realized that in this fiercely competitive world, they can differentiate their offerings with the help of services. No marketer can afford to offer only a pure good or a pure service in the market. Hence, marketers need to focus their attention on developing marketing strategies for the total product, rather than confining their strategies to pure products. The strategies so developed must be based on the similarities that exist between tangible (good) and intangible (service) aspects of the product. Moreover, it is essential to distinguish not only between goods and services but also between different services to formulate appropriate strategies for marketing them.

Marketers of services face a bigger challenge due to the unique nature of services. They need to take special care to produce, price, promote and distribute their services. In addition to product, price, promotion, and distribution, there are three other aspects of services, which demand the attention of service marketers. These are people. process and physical evidence. The most important challenge faced by marketers is to distinguish their service offering from that of the competitor and bring about a consistency in delivering the service.

1. Product

Services are intangible in nature and cannot be seen. touched or felt. Another shortcoming of services is that they cannot be evaluated before purchase or consumption. Hence, customers of services, while making their purchase decision. rely heavily on their past purchase experience, word-of-mouth publicity, reputation of the service provider, brand name and promotional activities. Marketers use various strategies to market services. For example, (a) they try to offer the same standardized service to all their customers; e.g. overhauling a car, a courier service. etc.. (b) they customize the service according to the needs of the customer; e.g. doctors. consultants, etc. offer different services depending on the need of the customer. Service providers also leverage on their brand name gained over the years. Brand name helps in differentiating the service and expressing a brand's superiority over rival brands. For example, brand names such as McDonald's, Singapore Airlines. Taj Hotels, etc. reflect the quality of the service offered by the service provider.

2. Pricing

Most customers do not wish to pay for services due to their intangible and perishable nature. Hence, service marketers use various strategies to recover their costs. These strategies also vary across different industries. It is interesting to note how marketers and service providers use various names for the price they charge. For example, price is termed as 'fees' in case of a doctor, lawyer or accountant, 'rent' for a house. building, home appliance and other equipment. 'admission fee for education, recreation parks and resorts, 'premium' for insurance policies and 'interest' on loans etc.

Service providers try to attract their customers by setting flexible prices, but it is essential that they take into consideration the cost of providing the service before setting their prices. For instance, people-based services are labor intensive and call for the service provider to set a price that allows him to make a profit after recovering the labor cost. Marketers also use other strategies like setting the price according to (a) demand for the service, (b) season and time of the year, day, etc. (for example, restaurants and resorts vary the price of their service according to the time of the day, season, etc.) (c) age of the service consumer, e.g. low price is usually charged for children and senior citizens in resorts, transport services, etc. and (d) the customer's ability to pay (for example, some doctors and lawyers charge a fee based on the ability of their client/patient to pay).

3. Promotion

Promoting an intangible is quite a challenging job for marketers because they cannot exhibit its features. Therefore, marketers resort to using the ambience of the service firm, its employees. awards and certifications received, etc. to project the quality of their service. Such a kind of promotion is seen in the case of hotels, recreation centers, transport services, etc.

Marketers also realize that customers form an opinion about service quality based on their impression of the ambience and employees of the firm. Personal selling plays a dominant role here. Hence, service providers look for ways and means to improve the ambience and also provide training to their staff to improve the service delivery.

Service providers may also make use of the services of other firms to enhance their image. For example. the Taj Group of hotels that caters to three types of customers. viz. luxury. business and leisure, has appointed the US-based Landor Associates (consultancy firm) to re-build and restructure its image.

Publicity is another tool, which is widely used by service providers. For instance, professional sports agencies, travel agencies, airways, etc. benefit from the publicity obtained by sponsoring various events. Other service providers like doctors, lawyers, accountants, insurance agents etc., take an active part in community affairs and volunteer services to gain publicity.

4. Distribution

Services are produced and consumed simultaneously, which implies that services are sold directly to the customer. For example, services like repair, medical care, legal consultation, etc. do not have any intermediaries or distributors. However, there are also other services like public utilities (electricity, gas, ration, mass transport etc.), financial securities, travel and entertainment that require a middleman to distribute these services to the customer.

Christopher Lovelock, in his book Services Marketing, has pointed out that the methods of service delivery depend on the nature of interaction between the customer and the service provider. There can be three types of interactions between these two parties (a) the customer must visit the service provider as it is nearly impossible to deliver these services at the customer's doorstep e.g. air travel, health and beauty care. fast food, public transport system, etc. (b) the service provider goes to the customer's location e.g. mason and plumber, mail delivery and courier service, baby sitting etc. and (c) neither the customer nor the service provider has a physical interaction for service delivery to take place, e.g. internet-based rail and air ticket reservation, fax, broadcasting, etc.

Marketers devise various strategies to attain the firm's selling objective and gain customer loyalty. To this end, the service providers train their dealers to sell their products. Another distribution strategy that can be adopted by a service provider is that he tries to choose the most convenient and desirable places for the service delivery e.g. banks try to locate their branches and ATMs near shopping centers and well-connected areas; physicians and dentists try to open their diagnostic centers in well populated areas; hotels and restaurants try to locate themselves close to airports, railway stations, bus terminals and business centers.

5. People

People management is an important aspect of service organizations. Service organizations gain a competitive advantage through their service personnel. The personnel in a service organization can have an impact on the service delivered in various ways. Customers often judge the performance of a service organization by associating it with the behavior and attitude of its service personnel. For example, an unpleasant experience with a rude employee at a restaurant leaves bitter memories of the restaurant in the customer's mind. Hence, service organizations take a lot of care in providing behavioral training to their personnel. They lay emphasis on courteous behavior and friendliness while dealing with customers. The personnel are also trained on how to handle unruly and unpleasant customers and on the use of proper language and posture, and maintenance of cleanliness and proper appearance. These measures by service firms help them in maintaining a high quality of service delivery. British. Airways, for example. differentiates itself from other airlines on the basis of its personnel.

6. Process

Marketing of services depends on meeting customer expectations. Over the years, some service organizations have standardized their processes and thus reduced the element of human judgment and error in their service delivery. Labor costs and competition in the service industry have increased tremendously and many service organizations have made customers an integral part of the service delivery process so can be reduced and the benefit can be passed on to the customers. that labor costs can Though the expectations of some customers are not met, others are ready to be involved in the service production activity for lower prices. For example, a restaurant offering self-service charges lower price than others. Service organizations identity the customers who do not want to take on the co-production responsibility and are willing to pay higher prices for the service to be delivered to them. For example. customers are even ready to pay an additional amount as commission to portfolio managers for managing their mutual funds.

7. Physical evidence

Service customers experience greater difficulty in assessing a service as they cannot rate it until it is consumed. Therefore, service providers try to attach an element of tangibility to their service offers. This is the physical evidence and can be in any form. For example, brochures in travel agencies showing the details of a holiday destination and the interiors of a fast-food outlet provide physical evidence to the customers.