Potential for Growth of Service Marketing - Term Paper Example

Executive Summary

The report aims to deduce on the current status and potential for growth of service marketing, precisely in the health provision. The inaugural parts of the document intricately depict the history and evolution of marketing functions of the industry, even offering documented data to validate the findings. Afterwards, the core operations in the health industry are adequately dissected. Furthermore, the report expounds on the importance of market segmentation to conventional businesses and thus achieves in compiling the possible market segments accessible by the organizations. Accordingly, various diverse sets of data are used in distinguishing respective market segments, particularly those that are demographic in nature. After that, the report explores the use of marketing mix as an instrument aimed at achieving organizational success. Finally, the document concludes by offering viable suggestions based on the findings.

Introduction

Shockingly, despite the continued existence of the service industry, very little is known about service marketing. In fact, industries players perceive it as a relatively new business concept. Additionally, this revelation contravenes the fact marketing is one of the most ancient organizational functions. On the other hand, one can argue that service marketing can be a rather daunting task since they lack visibility and tangibility aspects which are highly instrumental in inducing prospective customers into a purchase. Consequently, services are deemed to be bereft of the feature of ‘inspectability’ which is imperative for consumer grading purposes. Also, services are variable; in that, service providers have their unique way of delivery, therefore, making it difficult for the industry to attain some sense of standardization. Moreover, the scale and magnitude of challenges plaguing the service sector are compounded by the industry’s comparatively high susceptibility to fraud.

Contrastingly, irrespective of the myriad of ever lurking difficulties facing it, the service sector has recorded tremendous growth in recent times. In fact, a survey by the Labor Department in conjunction with the Bureau of Labor Statistics recently predicted an annual growth of rate of 2.4% over the next four years (Lovelock, 2007). Additionally, the study also indicated that the sector employed 80 % of the total U.S. workforce (Ritcher, 2012). Thus, it would be prudent to attribute these gains to the effective marketing strategies employed by the specified companies. Also, the consistent popularity of outsourcing among firms has contributed significantly to the prosperity of the trade. Similarly, innovations in the business arena such as drafting of Service Level Agreements (SLAs) have promoted the legitimacy of the field thus enduring it to existing and customers (McDonald, 2012).

Service Provider Description

Most, if not all countries’ constitution, access to quality and affordable health care has been listed as one of the fundamental rights bestowed upon every human being. Hence, these alongside other factors explain immense size and growth of the medical care industry by revenue. Besides, data from the National Bureau of Statistics suggested the subsector lately registered an annual turnover of $1.6 trillion (Lovelock, 2007). Additionally, the World Health Organization (WHO) recently ratified health care as a basic human want, thus elevating it to the status of essential products thus consolidating its implied nature of repetitive purchase (Lovelock, 2007).

Apart from being an important commodity, the diverse nature of the health care industry has absolved from the current trend of obsolesce faced by fellow sub-industries such as the provision of postal services. For instance, the discipline offers a broad spectrum of services such as consultation, surgery, treatment, and general wellness. Furthermore, intricate research in the field has engendered of specialization yielding to specified professions such as cardiovascular medics.

Similarly, over the years, the health care industry has incorporated various aspects of fellow industries such as business, Information Technology and engineering resulting in increased efficiency and optimization of operations. Recently, health care organizations have partnered with insurance firms offer to enhance access and affordability the services. Practically, an accurate depiction of this scenario is replicated in the relationship between the government and Statutory Health Insurance).

Consequently, nowadays routine visits to hospitals have proved less strenuous. Evidently, consultations can be scheduled online and similarly carried out through video portals such as Skype. Successively, upon arrival at the center, the medical file of the patient are electronically accessed and retrieved by the general practitioner. Within a short period after diagnostic consultation details are updated to the existing personal medical data, and consequently a medical order is generated indicating whether the patient is required to seek further specialized treatment or is prescribed certain drugs. Evidently, optimization of health services led to cost reduction, reduced wastages, and most importantly enhanced customer satisfaction.

Target Market Analysis

Recently, market segmentation has proved to be a necessary procedure of the larger market intelligence process. Evidently, increased competition in the consumer market primarily as a result of globalization, proliferation of organizations, and specialization of firms has mandated organizations to profile their existing and prospective customers into various strata according to different factors to meet their expectations and thus enhance sales. Moreover, it is prudent to mention that this effective practice originated from manufacturing multinational Proctor and Gamble. Apparently, their dominance and market leadership status in the manufacture of consumer commodities serves as an adequate testament to the relative effectiveness of the procedure (Schindler, 2011).

Furthermore, elements of this practice have been swiftly incorporated into advertising where financially able organizations have entered into partnerships with social media such as Facebook. Accordingly, these firms can advertise their products on the personal pages of selected groups of social media users. Importantly, these groups are defined by relevant demographic information such as age, gender, and marital status which is available to Facebook, for instance (Mudie & Pirrie, 2012).

Interestingly, a recent survey by the Department of Health established that Americans sought medical services an average of four times year, with the latest census exercise indicating America’s population to be approximately 318 million (Wenderoth, 2009). Consequently, findings of these studies accurately epitomize the global market segment accessible to the health industry. However, this huge market segment can further be sub-divide into simpler and more precise classes tailored to the individual needs of specific patient groups. For instance, due to the statutory nature of NHI, the institution factors important details such as level of income to set the minimum possible subscription fees.

On the other hand, private medical healthcare providers such as the globally renowned GMC clinics rely on relatively precise demographic data to capture their niche market. Specifically, data such as birth, fertility, and infant mortality rates imperative for organizations that deal in Maternal and Feral Health Care. Subsequently, economic data such as the GDP of a nation, purchasing power, and consumer behavior of a population dictate the level and quality of health services affordable to given population (Wedel, 2000). Moreover, prevalence rates of diseases and conditions (terminal, communicable and incommunicable) such cancer, diabetes, and the like may facilitate the identification of a need gap and equally a market segment. Also, the population attitudes on health and fitness may indicate the level of reception a prospective health company is likely to garner (Ritcher, 2012). Additionally, information on religious affiliation may also prove pivotal since some denominations such as the Amish do not advocate the use of contemporary Medicine.

Market segmentation enables firms identify specific consumer needs and want and thus leverage service provision. Additionally, the organizations may choose to condense or broaden their targeted market segments in respect with organizational goals and objectives.

One of the most fundamental conceptions of modern day marketing is the marketing mix. Accordingly, a marketing mix is a complex formula that stipulates essentials components to any following marketing functions. Precisely, the prospective success and failure of a marketing exercise are gauged against these factors (Jester & Soilen, 2009). Originally, the marketing mix constituted the 4 Ps which included aspects such as product, price, promotion, and place (Smith, 2011). However, over time, a more generic and sustainable model was generated to include variables such as people, physical environment, and process. Furthermore, it is prudent to mention that either model can be successfully adopted to analyze the marketing functions of firms in diverse industries (Nouman, 2006).

Price

Contrary to populist beliefs, pricing is a highly delicate business procedure where multiple number of factors are taken into account in the overall process. Moreover, these are mainly cost driven or market driven. Purposefully, due to the implied nature of contemporary consumer markets most health firms are inclined to use market-based strategies so as to gain a competitive advantage in the market.

Competition Pricing

Evidently, this strategy is rather popular in government owned or Not for Profit health agencies whose primary objective is to provide affordable health care to the public. Consequently, prices for health services are set in accordance with market rates.

Differential Pricing

In this instance, health providers preferentially set different prices for specific market segments which are typically classified according to their purchasing power. Importantly, the quality of services offered is uniform across the market segments.

Penetration Pricing

However, in this scenario, the health firm sets low initial prices for the services aiming at creating a customer base and consequently increases its market share. Moreover, penetration pricing is mainly synonymous with relatively unpopular brands (Callingham, 2004).

Market Skimming

Furthermore, this strategy depicts a scenario where a health provider, usually a globally renowned brand sets high introductory prices capitalizing on customer excitement. However, after a short period the prices stabilize reflecting on the existing market prices.

Product

Contrastingly, this aspect of the marketing mix mainly entails performance and conformance specifications of the product and their relation to the ultimate consumer. Also, this component also divulges on product dynamics such as product life-cycle. Furthermore, it also prescribes product variation about changes in customer preferences.

In respect to the health environment, dynamics to a product consist of quality, customer satisfaction and follow-up initiatives (Lee & Ben-Natan, 2002).

People

Incidentally, this aspect of marketing mix was incorporated to fulfill the requirements of service providers. Consequently, it entails matters relating to staffing; from a clinical perspective. This is inclusive of doctors, nurses, other medics, and administration personnel. Furthermore, this notion also relates to attitudes and cultures associated with the product, for instance, some health care providers strive to insist and project affordability to their consumer market. Finally, this concept similarly captures on subjects relating to remuneration (Blokdijk, 2008).

Physical Environment

As earlier implied, one of the distinctive characteristics of services is their intangibility. Therefore, upon service delivery, the end consumer inevitably needs to make contact with the service delivery staff. Hence, the grooming, professional conduct and etiquette of the service providers need to be as stipulated by the respective staff manual if the firm is to attract and maintain existing clientele base (Blokdijk, 2008). Furthermore, the online footprint of the service is equally included in this factor. The service providers must consistently update their websites and set ups social media accounts to enhance interactions between the firm and its customers.

Recommendations

In conclusion, despite the unique nature of services quantifiable gains realized in reconciling marketing intricacies with service provision. Hence, it would ultimately prove sensible for health services providers to adopt contemporary and viable marketing procedures such as the use of Snap Inc. and YouTube as demonstrations can be effectively portrayed.

Additionally, health care and service providers, in general, should periodically revise their marketing strategies by frequently carrying out marketing intelligence hence identifying emerging market segments keep up with the changing consumer preferences. Consequently, the following policies will engender increased popularity of service based organizations.