What if Your Product is a Service?

The products that your company markets may be physical goods or they may be services. Services are activities provided to other parties which do not result in the ownership of anything. Their production may, or may not, be tied to a physical product[1]. Goods and services are different forms of 'product' offerings.

The basis of most marketing theory is the fast moving consumer goods (fmcg) market, which is characterised by mass production, high volume, physical products. Unfortunately, the fmcg market differs dramatically in many ways from growing areas of private and public service provision.

Services include such things as telecommunications, air travel, hairdressing, taxation consultancy, architectural drawing, medical advice, public transport and of course tourism.

Offerings may be pure goods, pure services, or a combination of both.

What do you do when your product is a service rather than a physical good? Do services need to be treated differently from a marketing point of view?

Whether you are selling goods, or selling services, in the end, you are providing benefits to your customer. The same general principles of marketing apply. However, there are some differences for service marketing that are worth noting, and may help make a difference to your marketing results.

How Does a Service Really Differ?

Formal marketing texts tell us that services are intangible, inseparable, perishable and variable. Of what use is this information in a practical business sense?

These attributes are key for the development of strategies and tactics for corporate positioning, employment practices, customer service, business processes and quality control.

Intangibility

Services do not have physical dimensions or characteristics. Goods are tangible; you can see and touch them. However, with services, you can do neither. You can buy a can of tuna and take it home in a bag, you cannot do this with a service.

Services cannot be examined prior to purchase, so buyers do not know exactly what they are buying from you. In effect, they are buying a promise, that you will perform a service as you have agreed. A service could be a promise to do someone’s tax return, develop your web site or provide them with a nice room in which to stay.

Inseparability

Services cannot be separated from their providers. In fact, in the sale of a service, the producer and consumer often interact.

A hairdresser is the person who cuts your hair and a teacher teaches your class. You can not have these, and many other, services without the service provider being involved.

Perishability

A service cannot be produced in advance and stored until you need to use or sell it. It is produced at the time of consumption.

If you are a doctor and do not fill your appointment calendar on Monday, then you have lost an opportunity for income, as you cannot store the time to use it on another day. Your product offer has perished, likewise if a room stands empty over the weekend.

Variability

Standardisation of service output is almost impossible. The exact type and level or service provided each time that the same service is supplied will differ.

The first time a customer goes to a bank to deposit money into their account, will be different from the second time they go. The teller may be a man, not a woman, he may not smile as much, there may be fewer, or more, people waiting in the queue, and the teller may or may not have taken lunch.

How to Maximise the Effectiveness of Your Service Offer

We traditionally look at the '4P’s' of Product, Price, Place and Promotion for our marketing planning. However, when looking at services we need to add an additional 'P', for the People who deliver the services.

Product

When marketing services, we need to describe tangible elements of the product, or provide physical clues. This can take the shape of peripheral physical evidence, such as tickets issued for transportation, which, in themselves, have no real value. Their role is to add tangibility. Photographs are a good way to make your service more tangible.

All aspects of your personal appearance, and of your office, or car are very important for your positioning and corporate image due to the intangibility of your service offer. Banks and insurance companies traditionally house themselves in 'solid' buildings, in order to enhance the perception of being dependable. Hotels have lush foyer areas and uniformed staffs, to make the accommodation experience more tangible.

As customers cannot be sure of quality or performance until after the service is provided, they need to be assured by other means. Often testimonials from satisfied customers, tapes and videos help to assure potential customers. Service level guarantees are another method used in industries such as telecommunications.

Price

Products usually have price tags, however services often do not. When you buy a sofa, you know the price up front; you pay it, and take the sofa home. When you need decoration services for your apartment, the price depends on quality, size, timing and experience of the designer.

When services do not have fixed price tags or guarantees, the customer can feel very uncertain about their purchase. If you can price certain aspects of your service, this will help the customer feel that they are in control. Internet Service Providers offer a certain number of hours access for a fixed price, which enables customers to budget in advance.

Pricing also affects positioning. An architect who charges half of what other architects charge, may be seen as cost effective, or may be seen as doing a shonky job. If they charge slightly more, they may be seen as doing a better job, or they may be seen as expensive. Your pricing needs to be consistent with the image that you wish to project.

Finally, pricing can be used to manage the supply and demand of services. As services perish if they are not used, an over-supply may be overcome by using discount pricing, and over-demand by increased pricing. Hotels often offer a weekday discount rate to encourage guests to stay longer during their less busy periods.

Promotion

Promotion plays a major role in service marketing, as information dissemination is very important. Written and visual material can help you to provide credibility and reassurance to prospective customers.

Make your services seem more tangible, with websites, brochures, handbooks, tickets, coupons, signage, advertising, office decoration and dress. Use images, descriptions and examples to help bring your service to life. Technology, in the form of the Internet, means that you can now provide large amounts of information to potential customers cost effectively.

Concentrate your promotional efforts on reducing uncertainty. People cannot verify your claims by an inspection of the physical product, so samples, case studies, before and after photos, tips booklets, newsletters, demonstration tapes, checklists and handouts are all helpful.

People

Service marketing depends on people, as people deliver many services. Concentrate on quality control, training, staff experience, your selection criteria, motivation, process simplification, and use of technology to assist in overcoming variability problems associated with service delivery.

Be aware of the critical incidents involved in the sale, delivery and follow-up of your services. Training for service delivery and effective ongoing management of people is key. Your staff must all be working on the one team, and ongoing communication to employees ensures that they feel they are part of the team.

Ultimately, both goods and services provide solutions to a customer want or need, so in principle they follow the same marketing rules. However, strategies and tactics are areas where you can begin to improve your service marketing efforts right away.

Copyright Penny Young