SERVICE FIRM MARKETING STRATEGIES

As of 2005 over 70% of all U.S. employment was in the service producing sector. Additionally, services account for over 70% of the gross domestic product and will produce 90% of all new jobs in the next ten years.

What are the characteristics of the services industry?

• Intangibility. Marketing services are intangible since they cannot be seen, tasted, felt or sensed. Services are unknown until they are performed (for example, a woman seeking a new hairdo from the hairstylist does not know what it will be like until it is actually done). Because of the unknown nature of services, marketers must create an image of quality, reliability and value for the consumer.
• Immediate production and consumption. Services are consumed as fast as they are produced. A lawn service leaves a trimmed lawn as soon as it is finished. Therefore, developing a strong relationship with the consumer is critical for the marketer`s success.
• Perishability. Services cannot be saved or stored. It is difficult for service firms to provide the ideal level of service at all times. During periods of peak demand, resources may be overtaxed, while during periods of low demand, resources are underutilized. Organizations providing mass transit often find that trains or buses are overloaded taking passengers to the urban area during the morning rush while they are empty on the return ride.
• Inconsistency. There is no standard in services. The level of quality varies depending on who provides the service as well as when and where it is provided. Resume writers provide a wide variety of resumes depending on who is writing it, what their industry depth of knowledge is, how well they write and what level of interest they have in the consumer.

How is marketing performed for the service sector?

Marketing for the service sector is more complex than tangible products primarily because of the difficulty of defining quality service, and managing productivity.

• Service market differentiation. The greatest challenge for service marketers is differentiating between service providers. If consumers perceive that service providers have indistinguishable offerings, then price competition becomes the only differentiating feature. A method of differentiating services from the competition is to add innovative features. Thus, the marketer adds to the primary service package by offering a secondary service package (for instance, an automotive lubrication service provider adds a secondary service package of automotive manufacturer certification, speed of service, and a consumer comfort facility to distinguish its service from the traditional service station or automotive dealership).
• Service productivity. The service industry is experiencing a need to increase its productivity to remain competitive. However, the service industry is highly labor intensive. Increasing productivity, therefore, is extremely challenging. The following methods can be utilized in the service industry to increase productivity.

Better utilization of labor. Management can research and develop more effective service procedures. Employee skills can be upgraded through training to make their service activities more effective.

Trade off quality for quantity. In order to improve productivity, organizational procedures are developed whereby less time is spent per service unit. This may require changing the nature of the service as well as how services are delivered (e.g., using an automatic phone router which screens and routes phone calls).

Automate the provision of services. The implementation of technology often can reduce the need for labor while increasing consumer satisfaction (such as, installing a fax back system which immediately provides consumers with requested information).

Update current employees. Utilizing training and certification programs, It may be possible to upgrade lower paid employees to perform specified services performed by professional (for example, nurses are now performing many medical services previously performed by doctors).

Allow consumers to perform self-service. Increasingly consumers are substituting their own labor for procedures formerly performed by employees (as in, self-service gas stations).

How can service delivery differentiation be achieved?

Service delivery can be differentiated with the “3P`s” of service marketing: people, physical environment and process. Having better trained and more competent people can be extremely important in the service delivery process itself. Improving the physical environment of the service delivery environment is also extremely important (for example, having a clean and cheerful waiting room can be crucial in improving the overall image of an organization). Finally, improvements and innovations in the process can also make a critical difference in service market differentiation (e.g., the installation of bar code scanners in supermarket expedites the check-out process with improved accuracy while enabling management in maintain a real-time management information system).