What is service marketing?

Service marketing is marketing based on relationship and value. It may be used to market a service or a product. With the increasing prominence of services in the global economy, service marketing has become a subject that needs to be studied separately. Marketing services are different from marketing goods because of the unique characteristics of services namely, intangibility, heterogeneity, perishability, and inseparability.

In most countries, services add more economic value than agriculture, raw materials and manufacturing combined. In developed economies, employment is dominated by service jobs and most new job growth comes from services. Jobs range from high-paid professionals and technicians to minimum-wage positions. Service organizations can be of any size from huge global corporations to local small businesses. Most activities by the government agencies and non-profit organizations involve services.

The American Marketing Association defines services as activities, benefits, or satisfaction that are offered for sale or provided with the sale of goods to the customer, that is, pre-sale and after-sales services. Berry states, ‘while a product is an object, devise or physical thing, a service is a deed, performance, or an effort’.

Features of Services:

  • Intangibility:

A physical product is visible and concrete. Services are intangible. The service cannot be touched or viewed, so it is difficult for clients to tell in advance what they will be getting. For example, banks promote the sale of credit cards by emphasizing the conveniences and advantages derived from possessing a credit card.

  • Inseparability:

Personal services cannot be separated from the individual. Services are created and consumed simultaneously. The service is being produced at the same time that the client is receiving it; for example, during an online search or a legal consultation. Dentist, musicians, dancers, etc. create and offer services at the same time.

  • Heterogeneity (or variability):

Services involve people, and people are all different. There is a strong possibility that the same inquiry would be answered slightly differently by different people (or even by the same person at different times). It is important to minimize the differences in performance (through training, standard setting and quality assurance). The quality of services offered by firms can never be standardized.

  • Perishability:

Services have a high degree of perishability. Unused capacity cannot be stored for future use. If services are not used today, it is lost forever, For example, spare seats in an airplane cannot be transferred to the next flight.  Similarly, empty rooms in five-star hotels and credits not utilized are examples of services leading to economic losses. As services are activities performed for simultaneous consumption, they perish unless consumed.

  • Changing demand:

The demand for services has wide fluctuations and may be seasonal. Demand for tourism is seasonal, other services such as demand for public transport, cricket field, and golf courses have fluctuations in demand.

  • Pricing of services:

Quality of services cannot be standardized. The pricing of services are.usually determined on the basis of demand and competition. For example, room rents in tourist spots fluctuate as per demand and season and many of the service providers give off­season discounts.

  • Direct channel:

Usually, services are directly provided to the customer. The customer goes directly to the service provider to get services such as the bank, hotel, doctor, and so on. A wider market is reached through franchising such as McDonald’s and Monginis.

Problems in Marketing Services:

  1. A service cannot be demonstrated.
  2. Sale, production, and consumption of services take place simultaneously.
  3. A service cannot be stored. It cannot be produced in anticipation of demand.
  4. Services cannot be protected by patents.
  5. Services cannot be separated from the service provider.
  6. Services are not standardized and are inconsistent.
  7. Service providers appointing franchisees may face problems of quality of services.
  8. The customer perception of service quality is more directly linked to the morale, motivation, and skill of the frontline staff of any service organization.