Services and products are different. As a result, service marketing requires a different approach than the marketing of products.
Understanding what services marketing is and how it’s different from marketing products helps you to develop better marketing strategies.
First of all let’s explore the differences between services and products.
Services Are Intangible
A product has physical characteristics, such as shape, weight, color, texture, etc. Products are tangible. For instance, a car, a washing machine, a computer, a widescreen TV, a pair of jeans, etc., are all examples of tangible objects. In simple terms, you can touch and feel a product.
A product provides benefits to the user because of what it does, the functions it performs.
On the other hand, a service offering has no physical size, shape, color, or weight. You can experience a service or see the result, but the service itself is intangible. For instance, IT services, legal services, car repair services, web design services, etc., are clearly intangible. You cannot touch or feel a service.
Services are performed, products are manufactured
Another aspect of service vs product is that the customer’s benefit of a service comes from an activity performed by the service provider, not from a physical object.
For instance, a car mechanic uses tools and parts to fix a car. But, what the customer is really buying are the mechanic’s experience, skills, and time to get their car fixed.
While an attorney relies on their education, law books, legal databases, etc., what their client is looking for is the attorney’s expertise. What they’re really buying is the resolution of their legal problems.
Services cannot be kept in inventory
Another key difference between services and products is that it’s impossible to create an inventory of service offerings. It’s just impossible to create an inventory of, for instance, root canal treatments, haircuts, oil changes, legal advice, or consulting projects.
You cannot put a service on a shelf, waiting for distribution and delivery to the customer at a later time.
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 medical procedure, or legal advice.
If the service was not provided properly or if the customer is not satisfied, the service provider can try to remedy the situation. For instance, by redoing the service to fix the problem or perhaps offering a refund. But, the service initially provided cannot be erased.
Service Marketing Requires a Different Approach
Since services and products are not the same, you have to approach the marketing of services differently as well. The fundamental difference between service marketing and product marketing is the key to success.
Define the service offering
First of all, it’s important to state clearly what the service offering is all about to help the customer determine whether this is the right solution for them. Make sure that the right benefits are offered, to the right customers, and for the right reasons.
A good definition of what the service is about is very helpful in selecting your target markets. In addition, it helps employees to understand what the firm does and for which customers.
Customers are often active participants in the service delivery process. It is important to manage their expectations of what will be provided, how, and to clarify what their role is. A service description can make this clear.
Unlike products, services do not offer customers visual clues about function, performance, and benefits. A good service description helps customers understand what the service is all about, the process, and the benefits.
Without this information, the customer may not understand the service well enough to be able to make the purchase decision. A service description should clearly state:
- What the service is
- Why it’s important
- How the service is provided
- Who the service is for
- Benefits of the service
Also, a clearly documented description of the service helps employees understand the details of the service offering and their role in the process. It sets a performance standard and can serve as a training tool.
The 7 Ps of Service Marketing
Similar to product marketing, the marketing of services needs an effective marketing strategy. For services we start out from what we know about product marketing and adds some elements.
You may be familiar with the “4 Ps” of the traditional marketing mix used by product marketers: Product, Price, Place, and Promotion.
Selling the right products and services to your target market is a very important element of a successful marketing strategy. You can’t be all things to all people. You have to make a strategic choice about what you’re going to deliver to solve your customers’ problems.
Pricing decisions have a direct impact on the bottom line. Price too high and you miss out on the sale. Price too low and you leave money on the table. Pricing also plays a key role in positioning the company and your brand image. Are you near the low-cost end of the spectrum or are you a premium provider?
Setting prices properly requires a good understanding of how customers perceive the value of your solution.
Making smart pricing decisions is as important for services companies as it is for companies selling products. Again, it starts with the customers’ perception of the value of the services offered.
The “Place” element deals with how and where you are selling and distributing your products and services. For a product-based business this could mean through a storefront, online, or through distributors. For a services company the delivery can take place at your facility, online, or some kind of technical infrastructure, for instance.
How you organize your sales force is also part of the “Place” decision. Are you going to have a dedicated sales force or are you going to work through distributors or representatives, for instance.
Promotion is what most people have in mind when they talk about marketing. However, real marketing is much more than promotion.
Promotion deals with all activities and initiatives to get the word out, create awareness, etc., to attract and keep the right customers. This involves digital marketing, brochures, websites, email marketing, social media, sales calls, telemarketing, trade shows, and so on.
Make smart decisions about which promotional activities are most effective for your particular business. It requires thought and planning to develop marketing campaigns that show a real ROI.
Additional marketing mix elements for services
The 4 Ps explained above also form the cornerstone of a good marketing strategy for services.
However, for services three more elements need to be added to the marketing mix: People, Process, and Physical Evidence.
Employees interacting directly with customers need to have the proper training, skills, tools, and attitudes to provide the service, effectively and efficiently. In addition to technical skills, knowing how to deal with people, good communication skills, and being customer-focused are important.
These hard and soft skills not only streamline the delivery process but also improve the quality and value of the service as perceived by the customer.
Another aspect is the service delivery process. Well-defined and documented processes ensure that the service is delivered in a consistent manner. This is important for efficiency as well as for service quality.
Customers perceive a service where everything goes smoothly as a sign of quality.
This last “P” deals with anything ‘tangible’ about your services business, such as the appearance, location, and cleanliness of your facility, the appearance of the reception area, the look and feel of your company’s website, documents produced, etc. It even applies to how your employees behave, dress, and interact with the customer as well as with each other.
Customers take notice if your business facility is not clean, safe, well-lit, or properly maintained. Your office has to look the part and match your firm’s positioning and branding. Make sure that your customers’ impression of your business matches the image you want to present.
Services are different from products. Acknowledging this is key to developing smart marketing initiatives for your service offerings.
A good service description helps both customers and employees better understand what the service is all about, what the benefits are, and how the service is provided.