Service Marketing - Essay Example

Service Marketing Marketing is not just advertising, promotion and selling. It is the management process which identifies consumer wants, anticipates their future wants and then goes about satisfying them profitably. Marketing activities include the development of a product or service, finding out what sort of customers might buy the product, what packaging should be used, what price should be charged and the appropriate place to sell it. Marketing usually means going out and finding what consumer requirements through market research are because if the consumer is not satisfied, products will not be sold and the business will be unlikely to make any profits. The extensive research made into studying marketing and its strategies has helped us; thus, the customers tend to develop more informed decisions. If the marketing department is successful in identifying customer requirements and predicting future customer needs, it should enable the business to not only increase its sales revenue, profitability and market share but also to maintain and improve the image of its products and bring variety and innovations to existing ones to facilitate the consumer at the end of the day. Marketing activities are devised in a manner catering to different cultural and social factors that influence the consumer buying pattern and decisions. Every society is categorized into different social classes and cultures. Therefore marketers segment the market into such groups and market accordingly because the buying behavior of one social class and lifestyle is different from another. Marketers tend to market products according to attitudes and behavior as well as roles and status (Kotler, 2006). We will observe the development and forces that are altering the marketing scene and testing marketing strategy like the growth of non-profit marketing and the need for more socially responsible actions. Previously, marketing’s application has been very broad when it comes to the business sector. Recently, however, marketing has also become a major component in the strategies of many non-profit organizations such as schools, hospitals, museum, symphonies, and municipal corporations. Many long standing non-profit organizations are now marketing themselves. Private colleges have started using marketing to overcome increasing costs and decreasing enrollments so that more students and funds come in. Student’s needs and wants are satisfied in a better way if they improve their communication and promotion strategies. Many performer art groups such as Lyric Opera in Chicago, which has seasonal sellouts, face huge operating deficits that they must cover by more aggressive marketing strategies. The YMCA, the Salvation Army and the Girls Scouts have lost members and are now modernizing their missions and services to attract more members and donors. Even government agencies have shown an increased interest in marketing. For example, the US army has a marketing plan to attract recruits and various government agencies are now designing social marketing campaign to encourage energy conservation and concern for the environment or to discourage smoking, alcohol and drugs. The continued growth of non-profit and public sector marketing presents new and exciting challenges for marketing managers (Jones, 2008). Let’s first understand the meaning of service. When you do something for someone, the action of doing it is called a service. While a product is tangible, a service is untouchable and not visible because it is not a physical material. A service is consumable and has to be experienced and cannot be owned. In marketing terminology, the nature of service has the following characteristics: it cannot be separated from the place, point or provider where it is consumed from. For example one cannot take a live concert home; it can only be experienced and enjoyed at the venue, while a product can be consumed, purchased and taken back home. A service is perishable; the same thing cannot be repeated in exactly the same manner or it cannot be stored for future use. For instance, when travelling by air, the air travel will only last for the time duration of the journey. There is always going to be a difference in service provision and cannot be identical because human effort is involved, thus it is variable. A service does not have a physical presence and cannot be felt or touched, it is intangible. As you cannot own a service so there can be no tights or ownership for the consumer who gets benefitted by the service, for example if you have attended the lecture of a professor but you cannot own it. Service marketing provides services to both business to consumer and also business to business. The marketing of services may be provided in all fields like hospital services, air travel, banking, healthcare, telecommunications, police and army services by government and private sector may offer schools, colleges, entertainment companies, and other professional services like counseling or advertising. All these services are now being marketed to satisfy consumer want accordingly. Consumers put in their time, effort and money to get facilitated by such services. We will now see whether it is really so or not. Do marketers pay any heed to consumer benefit other than their own motives? (Pope, 2009) The marketing for services is quite different from goods marketing because their strategies and goals differ too so the marketing is done accordingly. We just saw that goods are tangible while services are not. The quality of same services cannot be compared unlike goods. The service cannot be exchange or returned. Product marketing has the basic four Ps of marketing mix which are: product, price, place and promotion. There are three different Ps that are added when we talk about services marketing. They include people, physical evidence and process. The product itself is probably the most important element in the marketing mix. The product must fulfill a want. Consumers buy products for pleasure, satisfaction or benefits they provide. If it does provide the satisfaction, the good will not is purchased. Informed and aware customers will pay a price that is worthy of the quality of the product. The design that is the performance, reliability and quality should all be consistent with the product’s brand image. The marketing should be capable of stimulating new wants from the consumers. It must give something very distinctive that makes it appear different to encourage brand loyalty. Packaging is another part of marketing mix that influences consumer decisions. Consumers consider suitable packaging because it has to give protection to the product and not allow it to spoil. It also has to allow product to be used easily. It is no good having hair shampoo in a tin that would not allow the liquid to pour out easily. Packaging is also used for promoting the product (Armstrong, 2002). Just like the function of the service is important so is the process of providing that service. When there is lack of inventory and stocks there can be no fixed operational units. This factor of variability is involved with service marketing but with a proper process of delivering the service with standardized procedures, trained professionals and quality control measures, it can be reduced. With self-service, feedback and customer support through telecommunications, consumers also become involved in the process of production. Physical environment or servicescape is a term given to all the physical and visible signs and indication that give a proof of service quality and delivery to consumers. Location of the service provision, billboards, company transportation, and worker’s uniforms are all physical and touchable materials that guide a customer in the service process. This way a consumer can have some guarantee about the service productivity and satisfaction. While people, include all the human effort or labor of the company. They must possess the required skills, professionalism and expertise that can provide the firm with a competitive edge over others. All this affects consumer satisfaction. One of the rising trends of recent times has been the exponential growth in the services industry sector. As a result of rising affluence, more leisure time and the growing complexities of product that require servicing, the United States has become the world’s first service economy. Services now generate almost 74% of GDP annually since last thirty years. Whereas service jobs accounted for 55% of all US jobs in 1970, by 2003, they accounted for 81% of total employment. Services are rising quicker in the global economy, making up a quarter of the value of all international trade. In fact a variety of service industries, from banking to insurance and communications to transportation, travel and entertainment now accounts for well over 60% of the economy of developed countries in the world. Although service marketing is gaining more and more popularity these days due to competition in the market, but still these service firms have their limitations. As many service firms are small scale organization and their funds and profits are also small so they cannot afford to hire marketing professionals for the job. Service providing firms mainly focus on technical skills and neglect the importance and need for marketing. Marketing requires certain legalities and restrictions which some firms do not like to abide by especially those who are through professionals and have high self-esteem. Some service firms even ban marketing as they believe it contradict with their basic aims (Borrington, Stimpson. 2006). Moreover the mere characteristics of a service can become a hindrance in marketing. As it is intangible, its promotion will have to depend on performance quality and it can only be checked after the service experience. Firms must market, advertise and promote the service in a manner so that consumers perceive it as tangible. It may include endorsements, free samples/service to encourage more people to come, and offer tangible benefits in promotion. Because of intangibility, pricing issues also arise. It becomes difficult for a motor mechanic to determine the right price for his service which may just be appropriate with customer’s wants. As the service is not physical or visible, it gets difficult for consumers to understand the possible problems that can arise with it. Consumers want best value for their money in benefitting from a service. But when a service is experienced like for example boat rental service, they may never buy the product but will only rent it for the time being. Some services like air ticket seat in an airplane is simply a means to an end, you cannot have rights to it. Similarly, people hire waiters or labors or sweepers to do the work that they do not want to do themselves or maybe they do not have the required skills and expertise for it. A museum, park or art theatre is open for all so they are shared physical environments. Services cannot be stockpiled or stored for later use so it may leave a gap of unsatisfied demand and extra capacity which means inefficient use of resources. So marketers must segment the market and do marketing accordingly. They should market new services to comprehend existing ones. The staff must be trained for multitasking and market at non-peak hours with incentives like lower price at non-peak hours for example in a spa. Service firms must adapt new technologies to make marketing strategies more effective. Service marketing or non-profit marketing is mainly done by public sector organization. Public sector is a very important part of the economy. It includes all businesses owned by the state or government. There are two main types of business organization in the public sector. One is public corporation, which are wholly owned by the state or central government and mainly includes nationalized businesses. Government appoints board of directors who run and control the business according to the following objectives; they mainly act in a socially responsible manner. Money and profits is not their motive, they keep prices low so that the service is affordable by all and everywhere. They want to keep people in jobs so that unemployment does not rise. To keep to these objectives often costs a great deal of money. Public corporations often make huge losses. These are paid for by subsidies out of taxes. Most government realizes that they could not continue to pay for these subsidies so they altered their objectives like reducing their costs by reducing their number of workers, increasing efficiency by operating more like a company in the private sector and closing loss-making services. However, some industries are considered to be so important and strategically necessary that government ownership is thought to be essential. In many countries state airline is still in the public sector and electricity generation is rarely in the private sector. Important public services such as TV and radio broadcasting are often in the public sector for example BBC. Non-profitable but important programmes can still be made available to the public. If an important business is collapsing, then the government can come and step in and nationalize it. This keeps the jobs open and secure. If industries are controlled by monopolies because it would be wasteful to have competitors, then these natural monopolies are often owned by governments for example railway service. It is argued that this will ensure that customers are not taken advantage of by private monopolies (Borrington, Stimpson. 2006). But, there are no private shareholders to insist on high profits and efficiency. The profit motive is not very powerful so it leads to inefficiency. Subsidies also lead to inefficiency as managers will always think that the government will help them in crisis. It is also unfair if only public sector receives subsidies. Often there is no close competition in the public corporations. Therefore, there is a lack of incentive to increase consumer choice and increase efficiency. Governments can use these businesses for political reasons, or example just before an election they could create more jobs. Municipal enterprises are local government authorities that do trading activities. Some of these services are free to the user and paid for out of local taxes, such as street lighting and schools. Other services are charged for and expected to at least break even. These might include street markets, swimming pools and theatre. If they do not cover their costs, a local subsidy is provided in order to cut down costs and reduce the burden on tax payers, an increasing range of services are now being privatized. There are some non-profit organizations in the private sector like co-operatives. They are groups of people who agree to work together and pool their resources. They can take several different forms, but co-operatives all have certain common features. There are two types of co-operatives. Producer co-operatives are groups of workers who design and produce products in just the same way as other manufacturing businesses. Retail co-operatives are those which have the aim of providing their members with good quality consumer goods and services at reasonable prices. In many countries, the main type of co-operative exists in the agricultural sector. The members arrange for the purchase of materials in bulk in order to benefit from economies of scale. Then sell the output at attractive prices. Farmers owning small firms would be unable to gain from these features if they traded on their own. Non-profit organizations often work voluntarily to help people resolve their issues like charities and community groups. They have transparency in their mission and finances. They mainly focus on the intangible, variable and usually perishable goods which mean services. They focus on people and processes. It is difficult for them to practice marketing as they do not have the tools such as pricing and segmentation to market their services. The point is whatever little bit they do, how well they do it. The main purpose of their marketing should be to create awareness, distributing information, motivating volunteers, raising funds, allocating grants and campaigning in order to get media attention. The problem arises when they do not have big budgets to invest into marketing and instilling a marketing philosophy due to the nature of the service. They have to keep in mind both mission and consumer satisfaction and also justifying the success of marketing. Wider social objectives also put pressure on them. Market segmentation cannot be done easily and demand often exceeds the levels of supply due to lack of inventory. They cannot waste their much needed funds. There is a problem of consumer orientation, who cannot decide who the real customers are. Finances are used in a transparent manner. There is a discontinuity in exchange between customer, funder and non-profit firm. Their main aim is the performance of their mission and money is only spent on these aims. They cannot always choose their stakeholders and they are usually not paid for by their services. Then they try to influence the company’s decisions (Hume, 2011). Non-profit firm’s staff is often underpaid so they become inefficient. Job satisfaction is not derived from job. Volunteers feel powerless. These organizations do not base their strategy on money. Funds are not available for research and development. There is inefficient support for volunteers like poor training. The issue of ethics also puts a pressure on them. Their main aim becomes maximizing benefit rather than profits. They are forced to make the right decision in an ethical manner. If we consider charities, then the main aim is to give public benefit like advancement of religion or education or health, animal welfare and escaping poverty. But charities can also be marketed to increase awareness of the service provider, recruit and retain staff, improve efficiency and improved mission related performance. I would like to give a real life example of successful service marketing campaign that I experienced and really liked. My friend has a Marriage Bureau counseling office. Although she is quite known for her services in terms of reliability, guarantee and reasonable prices, but her target consumers are very limited mainly close friends and relatives. Even this much of target market was established through word of mouth. She came up with an innovation and started marketing her services on face book and twitter. She created her fan page on face book. Now it has helped her build her brand image and creating conversations, allowing users to get more deeply connected with her business even sitting at home. The functionality is now improved with a greater number of customers requiring her services for marriage related issues. So marketing her service with the help of new technologies and innovations helped her greatly because she always sincerely liked helping people with her problems without any profit motive behind. Most not-for-profit organisations are service organisations and they face specific challenges due to: the number and range of their stakeholder groups, non-financial objectives, the pressure and inspection they are put under by the public and the need to balance management and marketing with mission related work. Marketing is often viewed with doubt in not-for-profit organisations. Assessing the impact of marketing can be challenging when profit is not a substitute for success. References: Armstrong, M. B. (2002). Ethical Issues in Accounting. In N. E. Bowie (Ed.), The Blackwell guide to business ethics (pp. 145–157). Oxford: Blackwell  Brian Titley and Dan Moynihan. (2008) Economics: a complete course. Oxford University Press. Butler, P., Collins, N., (1995) Marketing Public Sector Services: concepts and Characteristics. Journal of Marketing Management, 11, 83-96. Cetina, K. K. and Preda, A. (2005). the sociology of financial markets. Oxford University Press  Roberto, Lee, and Kotler. (2006) Social Marketing:  Improving the Quality of Life. Sage Publications. Dembinski, P. H., Lager, C., Cornford, A., & Bonvin, J.-M. (Eds.). (2006). Enron and World Finance: A Case Study in Ethics. New York: Palgrave. Karen Borrington and Peter Stimpson. (2006) IGCSE Business Studies. 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