Services play an increasingly important role in the US economy. Adding services can be an important strategy for manufacturers looking to differentiate themselves. However, it’s important to realize that the approach to marketing these services should be different from the marketing of products.
Services and products are quite different in nature. It is important to be aware of this, both for the service delivery and for how a firm goes to market with its service offerings.
How Is a Service Different?
A product provides benefits to the user because of what it does, the functions it performs. A product has physical characteristics, such as size, weight, etc.
On the other hand, a service is intangible. A service can be:
- An intangible act, such as legal services, financial services, education, medical care, or consulting, just to name a few.
- An activity performed by the service provider that requires the presence and involvement of the customer. For instance, a medical procedure, a hair cut, fitness training. The customer must to be present and involved in the process, in one way or another.
- An activity applied to someone’s business, home, or other possessions. For instance, lawn care, car repair, house painting, dry cleaning, or janitorial services.
Key Characteristics of Services
Services Are Intangible – Services are intangible, products are tangible. A service has no physical size, shape or weight. You can experience a service or see the end results of a service, but the service itself cannot be touched.
Services Are Performed, not Produced – A service is an activity performed by people. Tools and equipment may be used in the service delivery, but the personal activity is essential. There may be a tangible component to the service, e.g., a lawyer producing a legal document, a dentist putting in a crown, but the personal activity is critical to the service delivery.
Services Are Delivered, Distributed and Consumed Simultaneously – Typically, service delivery, distribution and consumption all happen seamlessly and at the same time. There is no clear distinction between these stages, nor is there typically a time delay.
Services Are Customized – A service is always tailored to a specific customer, their particular needs and situation. Unlike products that are usually mass produced to a common standard, services are not ‘cookie-cutter’, standard solutions.
Services Cannot Be Stocked – It’s impossible to create an inventory of services prior to delivery. You can’t create an inventory of root canal treatments, equipment repair.
Services Cannot Be Returned or Undone – Once a service has been provided, it cannot be undone or returned. You cannot undo a haircut, a paint job, a surgical procedure, or legal advice. If the service was not done properly or if the customer is not satisfied, the provider can attempt to remedy the situation, but the initial work cannot be erased.
Service Delivery Is Highly Dependent on People – The quality of the service depends on the skills, training, experience, and attitudes of the people providing the service. Often, the customer is a direct participant in the process. For example, you cannot have a surgical procedure done without being present. The customer’s ability and willingness to play their role in creating the service has an impact on the outcome.
As a result of these inherent differences between services and products you need to pay extra attention to how services are marketed.
Creating a Service Offering
As the service provider, you need to make sure that the right benefits are offered, to the right customers, and for the right reasons. If you’re developing a service for your customers, consider:
- What does the service entail
- Who is the customer
- What is the customer’s need
- Which benefits are to be provided
- How will the service be performed
- Which resources are needed
The Marketing Mix for Services
Marketers used to apply the products marketing approach of the classic “4 P’s” of the Marketing Mix (Product, Place, Price, and Promotion), even to services.
The right mix of these elements is still critical. However, in services marketing three more P’s are added to the Marketing Mix: People, Process, and Physical Evidence:
People – Employees need to have the training, skills, tools, and attitudes to provide the service. In addition to technical skills, people skills, good communication and a customer focus are important. This not only streamlines the delivery process, it also improves the value of the service as perceived by the customer.
Process – Well-defined processes ensure that the service is provided in a consistent manner. This is important for efficiency as well as for the service quality. Properly documented processes also make it easier to train employees. A service delivery process that runs smoothly is perceived as a sign of quality by the customer.
Physical Evidence – This last “P” of the Marketing Mix deals with anything ‘tangible’ or visual about your service operation, such as the appearance and location of your facility. It even applies to how your employees dress and act.
Customers notice if your place of business is not clean, safe, well lit, or properly maintained. Your office or store has to look the part and match your company’s positioning and branding. If you want to be a high-end firm, make sure that your office looks the part. Customers have certain expectations that need to be met.
Focus on the People
Service is all about people. In the end, it’s people who buy and use services and it’s people who deliver the service.
Customers – Your customers not only purchase and use services, often they are also participants in the process of creating the service. It is important to manage customer expectations of what will be provided and to clarify what’s expected of them. A first step in doing this is the development of a service description.
Employees – A service description communicates to employees what the service is about. It sets the standard and serves as a training tool.
Every employee interacting with your customers is involved in service delivery. What they do or say (or fail to) and how they act becomes part of the customer experience. The service description helps your employees understand what is expected of them and how to engage with customers.
Develop a Service Description
Because of their intangible nature, services do not provide customers with visual clues about function, performance and benefits. This creates the need for a clearly defined service description to help customers understand what the service entails and its value. Without this the customer may not buy the service.
A service description clearly outlines what a customer can expect as well as why the service is relevant. It outlines how the service addresses a real customer need.
The service description should clearly state:
- What the service is – what is performed or provided
- Why the service is important – the perceived problem that drives customer need
- Benefits of the service – time saved, reduced costs, improvements made
- Deliverables – what the customer can expect, e.g., a report, a certificate, 24 hour response
As you can see, developing and marketing a service requires a different approach. Keep in mind that a service is intangible and that the service delivery is all about the people, including the customer who is often part of the service delivery process.
With thanks to Dee Davey of Creative Ideas Marketing for her original post.