True to the maxim by Philip Kotler- “Marketing takes a day to learn. Unfortunately it takes a lifetime to master”, all the companies try to achieve the best of the marketing practices in this vicious world. If one looks at service sector in particular, it is going through a phase of rapid changes. The changes in government regulation, privatization, globalization, internationalization, advances in IT, the role of manufacturers as service providers have modified the face of service marketing. A question to ponder here is why do we see the skewed nature of economies towards the service sector? Can there be an economy which derives its GDP solely on services? If yes, then How? For example, we see a country like Malaysia which bases its economy solely on tourism. For such an economy, manufactured goods are usually imported. The probable pitfall to such an economy can be that it may become less self-sufficient and may be a threat to national security. A more apt question at this stage is why the economies are leaning towards the service sector? Globalization drives international trade and tourism which in turn has increased the demand of passenger transportation, communication, leisure activities, international finance and food services. The rise in technology is the key driver in increasing service component of the GDP.
If I were to draw a line between products and services, the first thing which is most important is the timing. The real time nature of delivery of services is unique in itself. Either one takes the physical presence of the person into account or the speedy process people want to see in services, both are novel to services. In the latter case, where service delivery takes place without the customer’s presence, they have expectations about how long a specific service would take to complete. For example, repairing a dysfunctional gadget, financial services from a bank, or preparing a legal document. If this takes more than the expected time, this causes ‘consumer dissonance’, which is an uncomfortable feeling and usually leads to the customer taking his money elsewhere or experiencing remorse over the purchase. A buyer can experience remorse over a product purchase at any point in the entire purchase experience, including well after the consumer makes the purchase decision. Companies seek to shore up the buyer’s emotional status through reassuring post-purchase services, which generally is a money-back guarantee or free product service for the life of the asset purchased. These services form an important part of customer relationship management.
For example, many auto dealers have service outlets to repair vehicle and offer free safety inspections of vehicles purchased through the dealerships for the entire life of the cars. This post purchase behaviour by the companies can set them apart from competitors and allow buyers to make less-stressful purchasing decisions in the future with these companies. If we compare the marketing, HR, operations for a manufactured product vis-à-vis a service, we would know that in case of a product, the marketing is segregated from other functions. On the other hand in services, the customer becomes a part of the entire production process and hence complicates the segregation between these functions. There is no tangible component to service, so the customers rely on ‘physical’ clues, such as staff uniforms, the kind of ambience, plastic or silver cutlery, in the restaurant.
Let’s take an example of a bank. To enhance its service delivery, it wants to contact its customers via email, internet, phone, ATMs rather than the customers physically coming to the bank. For this, the bank wants to know why people don’t use certain delivery option for certain tasks. Suppose people would withdraw money from an ATM but would not like to deposit money at an ATM. For depositing the money, one would want the “physical evidence” of the 7P’s. With this idea in mind, we can see a lot of adaptation in the service industry especially food, where customers can have a peek at the backstage activities. One example is Mad Over Donuts, where one could see his/her favourite donut being prepared. Similarly, this can be extended to car repair facilities where the service operations are fully visible through glass windows. However, many of these backstage activities could be boring for some customers. Still, to have an impact upon the customer, this seems a viable option catering to the 7th P.
The aforesaid points have been discussed with respect to customer. The other half which complements the entire services process is ‘people’ i.e. the employees providing the service. If you are into a hospitality business, tourism industry, banking, employees in your organization and their behaviour towards the customers defines you. Relationship with the seller is a major driver for purchase as the products is intangible.
Another intriguing thought could be: ‘How the branding of a service is different from a product?’ Service branding does not differ much from customer perspective but rather on the company side. Services are intangible, cannot be standardized. Therefore it is difficult to build brand management models for the same. A service product is an experience related to service consumption, which may differ according to people’s tastes and experiences with the brand, which makes it difficult to standardize. With respect to branding of products, marketing is assumed to communicate product benefits and the organization handles production and logistics. In service business, all levels of the organization are involved in creating the customer experience. The organization and its employees must be aware of the company values, otherwise the service experience will not be effective and long lasting. Therefore, internal communications regarding values, messages to be conveyed to the end customers need to be taken care of, in order to deliver a consistent service experience and be able to do successful marketing efforts.
There has been a change in the way services are being branded. Earlier, the service companies used to emphasize the corporate name but today, in a highly competitive environment where lot of product proliferation is present, product brand names (sub-brands) have been given greater preference. A question which may come to someone’s mind is: Why does British Airways use specific sub-brand names like Club World? British Airlines wants its travelers to distinguish between the products and to know about the proliferation they have created. Club World is its intercontinental business class brand, which offers a different type of experience from that of other airlines and also from that of its European business class, known as Club Europe. In an ideal scenario, every step of the branding process should represent a distinctive branded-service experience so as to create preference for a specific offering.
What actually differentiates between a services communication and a product communication? When a communication is made for the promotion of a product, physical evidence is used to add abstract ideas whereas in services communication is made, abstract ideas have to be converted to physical evidence in order to make effective communication. Next cue could be, what kind of promotional activities should be carried out for such firms? For a quality leader kind of firm, the best promotions could be done by “Word of Mouth”(WOM). For a service product, people generally take recommendations from their friends, relatives, because they are considered a neutral person rather than the communications by the firm itself. Some of the ways for a better promotion by WOM could be referral schemes, publicizing testimonials, let people talk about the exciting offers, faster resolution of their complaints.
If we change places, and examine the situation from a customer’s viewpoint, what factors create value for a customer and how do these factors determine the pricing strategy? Generally, the services process is a combination of mental processing and people processing. It is a case of mental processing because people expect something pre-purchase of services and try to compare it with the service performed. People processing refers to the involvement of people i.e. employees in delivering services. Suppose, when you go to a salon for a haircut, you expect value in terms of more stylish hair. You see price menu in front of you and pay an aforesaid price for every element of the service, e.g., this price for a wash, so much for a cut, etc. Here is the branding which comes into play. You may wish to pay more for a well-known stylist eg Shahnaz Hussain, or at a prestigious salon, say Lakme/Matrix. Some services are of the type which requires the active participation of the customer, e.g. marriage counselling or a weight reduction program, here customers are viewed as the co-producers of the services. Any delay in performance by the customers may lead to a degraded outcome of the service performed. So, managers should be competent enough to educate their customers to co-produce well in such situations.
With the 7Ps in-place and the growing use of technology in every field, the nature of the service economy is bound to change. So, what is the way ahead?
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