Table of Contents
What are "Services"
see our discussion: service
Importance of Operational excellence for services marketing
It is interesting that the link between "Marketing" and "Operations" is closest in "services marketing". Why? Because of the way in which services are "simultaneously produced and consumed". In comparison to product manufacturers that can produce, store, ship and then deliver...a services marketing role will make the service new at the same time as they are delivering it. For this reason (lack of time between production and sales), it is essential that a services marketing operation delivers 100% quality the first time. While this might be easy in a small operation, it is increasingly difficult as the company reaches economies of scale. The challenge is to design the operating procedures so that the same level of high quality is delivered each and every time a customer is serviced. For this reason, the link between marketing and operations gets even closer in services.
Other operations issues to consider in services marketing:
1. How much capacity will you plan for? In services this issue is critical because of the nature of demand of the services industry. As compared to the manufacturing industry where extra goods can be produced in slow times (inventory) to sell to consumers when demand picks up.... in services marketing, there is no way to store inventory (an airline seat not used today can not be sold tomorrow). So, for this reason, the capacity planning issues are even more critical for services marketing than they are for manufacturing. This investment decision is complicated and should not be taken lightly.
2. Location selection issues are even more critical for services marketing. When making a capacity investment decision for services, you will need to locate your investment in fixed assets near to the location of your expected customers. The opposite of manufacturing occurs in services, where you first need to distribute your capacity, and then later you need to produce your product (service). For example, a company will first need to distribute hotel room capacity to all of the locations that consumers might want to sleep, and then they will need to sell the services. Or, a telephone service provider will need to first invest to have transmission capacity distributed to each neighborhood before they can offer the services. On the contrary, a manufacturing company will first produce the product and will worry later about how to distribute it to consumers (storing it as inventory, and selling it at a later date).
3. Services marketing needs to be ready for high volatility of demand for their services. Rush hour at lunch time for example. So, peak capacity will spike much higher than for manufacturing. So, services marketing operations needs to plan for this. Also, the amount of time it takes to service one customer varies from customer to customer...whereas a manufacturing operation can precisely plan how much time they will spend on each product produced. This extra variability makes it more difficult to plan for capacity requirements of services industries. As a result, many services industries plan the capacity in short horizons; ie scheduling the level of support staff needed to staff an event only at the last minute, calling up extra temp workers as needed
4. Capacity utilization directly effects the perceived service quality. In industries such as concerts... a full sold out stadium makes the whole experience better for each individual consumer, but other services industries such as airlines... a full capacity used (a completely full plane) makes other customers uncomfortable...and decreases the level of experiece of each customer.
Services Marketing
Marketing based on relationship and value. It may be used to market a service or a product.
Marketing a service-base business is different from marketing a product-base business.
There are several major differences, including:
- The buyer purchases are intangible
- The service may be based on the reputation of a single person
- It's more difficult to compare the quality of similar services
- The buyer cannot return the service
- Service Marketing mix adds 3 more p's, i.e. people, physical environment, process service and follow-through are keys to a successful venture. The major difference in the education of services marketing versus regular marketing is that instead of the traditional "4 P's," Product, Price, Place, Promotion, there are three additional "P's" consisting of People, Physical evidence, and Process. Service marketing also includes the servicescape referring to but not limited to the aesthetic appearance of the business from the outside, the inside, and the general appearance of the employees themselves. Service Marketing has been relatively gaining ground in the overall spectrum of educational marketing as developed economies move farther away from industrial importance to service oriented economies.
"Managing the evidence" refers to the act of informing customers that the service encounter has been performed successfully. It is best done in subtle ways like providing examples or descriptions of good and poor service that can be used as a basis of comparison. The underlying rationale is that a customer might not appreciate the full worth of the service if they do not have a good benchmark for comparisons.
However, it is worth remembering that many of the concepts, as well as many of the specific techniques, will work equally well whether they are directed at products or services. In particular, developing a marketing strategy is much the same for products and services, in that it involves selecting target markets and formulating a marketing mix. Thus, Theodore Levitt suggested that "instead of talking of 'goods' and of 'services', it is better to talk of 'tangibles' and 'intangibles'". Levitt also went on to suggest that marketing a physical product is often more concerned with intangible aspects (frequently the `product service' elements of the total package) than with its physical properties. Charles Revson made a famous comment regarding the business of Revlon Inc.: `In the factory we make cosmetics. In the store we sell hope.' Arguably, service industry marketing merely approaches the problems from the opposite end of the same spectrum.
Seven Ps
As well as the standard four Ps (Product, Pricing, Promotion, and Place), services marketing calls upon an extra three, totaling seven and known together as the extended marketing mix. These are:
- People: Any person coming into contact with customers can have an impact on overall satisfaction. Whether as part of a supporting service to a product or involved in a total service, people are particularly important because, in the customer's eyes, they are generally inseparable from the total service . As a result of this, they must be appropriately trained, well motivated and the right type of person. Fellow customers are also sometimes referred to under 'people', as they too can affect the customer's service experience, (e.g., at a sporting event).
- Process: This is the process(es) involved in providing a service and the behaviour of people, which can be crucial to customer satisfaction.
- Physical evidence: Unlike a product, a service cannot be experienced before it is delivered, which makes it intangible. This, therefore, means that potential customers could perceive greater risk when deciding whether to use a service. To reduce the feeling of risk, thus improving the chance for success, it is often vital to offer potential customers the chance to see what a service would be like. This is done by providing physical evidence, such as case studies, testimonials or demonstrations.
Links from Kooky Plan
External Links
http://en.wikipedia.org/wiki/Service_%28economics%29
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