Can we physically touch insurance service or service provided in a restaurant?
Absolutely not.
We can only experience them.
The entities we cannot touch and only experience are services.
Product marketing involves the promotion of a physically visible product in various forms, whereas service marketing requires the promotion of a service that is not physically available for customers but can only be experienced.
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Definition of Service Marketing
The American Marketing Association defines services marketing as an organizational function and a set of processes for identifying or creating, communicating, and delivering value to customers and for managing customer relationships in a way that benefits the organization and stake-holders.
P. Kotler suggested that” service is an activity or benefit that one party can offer to another that is essentially intangible and does not result in the ownership of anything. Its production may or may not be tied to a physical product”.
According to Morrison (2010), services marketing “is a concept based on a recognition of the uniqueness of all services; it is a branch of marketing that specifically applies to the service industries”
What is Service Marketing?
To understand the SM, we will have to understand the nature and characteristics of the “Service”
Below are the four pillars of service.
(Source: principles of marketing, Kotler, Armstrong)
Intangibility
This is the most fundamental nature that separates services from products.
So before deciding to buy, we cannot touch the service, nor can be seen, tested, smelled, heard or felt.
For example, a barber provides a hair cutting service.
Similarly, when I need to send a parcel from FedEx, I have nothing in hand except a receipt and a warranty of service that the parcel will reach the destination.
Service firms (medical practitioners, law firms, and accounting firms) that previously considered it unprofessional to use marketing have now started to market themselves.
Inseparability
This term states we cannot separate a provider of a service and the service itself, irrespective of the fact that a provider is a machine or a person.
For example, an ATM becomes a service provider and the process of withdrawing money is a service. When the machine goes bonkers, according to the experience we had, we say “it was bad service”.
However, if we observe closely in these situations, even a customer plays an active role in service delivery.
Variability
A unique feature of the service. It has more to do with the quality of service. Who is providing the service, when that service has been provided, where the service was provided are the questions.
For example, we consider Marriot to be the best in making their customers delighted.
It is fairly possible that I will come across an employee in New York who is at the end of his/her shift and was exhausted.
Whereas in London I met with a young energetic and cheerful employee who is starting his/her shift in the morning.
The same customer will have an uncommon experience, albeit the protocols were followed and they provided service on par. Yet ultimate experiences were different for both locations.
The same sort of thing happens when I go to a barber for shaving. I was happy and satisfied with the service, but my friend who is for shaving too is not that satisfied.
Perishability
This is another characteristic unique to the services.
Can we store the service for later use? Of course not. Service provisioning happens with service consumption. We cannot separate them.
A foot relaxing massage was given to a customer, which was consumed spontaneously.
A service is perishable.
Another aspect is demand and supply. What if there are more customers than a provider can handle? This is the reason hotels, resorts, restaurants have off-season or happy hours discounts.
Classification of Service Marketing
B2C (Business to Consumers)
Where a service provider tries to sell the services to the end-users (consumers). A restaurant sells food to the customers. Similarly, Verizon provides telecom services to consumers.
B2B (Business to Business)
Here, a business sells its services to another business and not the end-users.
A big firm wouldn’t want to waste its resources in managing HR services, payroll services and the likes. Hence, those tasks are being outsourced and the organization managing those services becomes a service provider.
Post-purchase service
An immensely critical factor in today’s day and age. When we buy car insurance, the insurance company is providing a service. However, they should also keep their promise when a customer is in need, say accident of the car. How the company is going to handle the post-sale requirement becomes a differentiating factor between various insurance companies. Post-purchase service separates a leader from the crowd.
Service Marketing triangle
A company, customers and employees are the three crucial entities for any business.
It is imperative to bind them together to create a better offering.
Internal marketing
It talks about the connection between an employee and a company. This is being done as service is being developed, maintained and supported by the employees of the company.
The employees are made aware of the company’s objective and also the vision of the company so that employees work in sync with those.
External marketing
As the name suggests, it is external to the organization. Here, the company tries its best to engage with the customers. However, not everyone is their customer, but the targeted ones.
This will be done with the help of websites, social channels, print media and so on.
Interactive marketing
The most critical one. This is where the rubber meets the road.
As we know, execution of the task is pretty important and what’s more important is the delivery of the services as per the requirements of the customer. When a customer is happy, he/she will tell others about your services. A word of mouth (WOM) carries much more weightage than any other.
The employee and the company wish to deliver a high-quality service to have the customer satisfied. Promise lesser, but deliver more than that.
Therefore, often the goal of marketing services is to create a good relationship with the target audience by developing and building trust.
The key to service marketing is ensuring that potential customers keep contacting repeatedly. This way, the business is up and running.
We have to remember that marketing service at every point of contact with the customer is important
Examples of Service Marketing
In small business
Say a bespoke suit maker. The owner can train the tailors to stitch better suits, different patterns, and styles. When a customer enters the shop, the owner can engage with him to educate him on the service offerings, timeline, cost, etc. associated with making a suit.
In the end, when a customer meets the assigned tailor, he should be able to understand the requirements of the customer, stitch it accordingly and deliver the item with the highest customer satisfaction.
Many service enterprises (flower shops, cafes and salons) have started to use modern marketing technologies like social media to promote their business.
In large business
Zappos, as a retailer, knows a happy customer brings more customers. For this, the company trains their employees to be energetic and dedicated and finally when customers meet the employees, together they create a delightful experience.
Similarly, Four Seasons hotels hire passionate people, offer a great salary, train them carefully, instill in them a sense of pride, and reward them for outstanding services. It treats employees as they are the most important guests.
Needless to say, even employees go the extra mile to make every single customer happy every single time.
Benefits of Service Marketing
Awareness
As we know, SM is all about the marketing of intangibles. It is a tool that creates awareness about services offered by the business.
Customers get educated about services through marketing activities of the business. Moreover, it also provides granular details to customers and motivates them to avail the intended services offered.
Revenue increase
Marketing of services helps businesses to attract more and more customers. They develop strategies according to the needs of customers.
It will motivate customers to avail the services and once the customers are happy with these services, they become advocates of the brand. Priceless promotion by word-of-mouth publicity.
This will eventually increase the sale of these services, in turn increasing the revenue for the company.
Employment Opportunity
We need people to design, maintain, and improve the services. Also, a human-to-human bond is immensely important in the marketing domain. They employed people who look after every aspect of the marketing of the services.
Helps in decision making
The decision of what to produce and what to deliver to its customers is always tough for business.
Business interacts with their customers and understands their needs and demands. Once their requirements are known, we can use them in decision-making and improving the offerings.
Cross-selling and up-selling
A great opportunity when a customer is satisfied. Say, a business has multiple services in the portfolio, like HR, IT infrastructure, logistics, etc. Once the customer, be it B2C or B2B, is happy with HR, the provider company can pitch for logistics services as well.
For example, if a customer is happy with AT&T’s telecom services, the company can try to upsell its cable TV services as well.
Today, larger financial service providers, such as commercial banks, benefit from having their own digital marketing teams to run their marketing programs, which helps in upselling to a greater extent.
Pitfalls to avoid in Service Marketing
Human error
Services marketing is a human-intensive activity. Whatever we do, human error is inherent in the chain of events. Though companies train the employees, inadvertently mistakes do happen. There is a need to have a post-production quality control that checks for defects and weeds them out.
For example, from making Pizza dough to delivering it to the customer’s table, several things can go wrong. A close watch is necessary to avoid an unpleasant experience.
Deviation
My favorite, when a service is offered and help/ support is sought, a company should, in the best possible way, need to provide the same. When this doesn’t happen, it is considered as a promise is broken. This impacts the business pretty adversely.
Hand holding
Once the service provider sells the service. It is the provider’s responsibility to educate customers about its operations. This is called hand-holding when a provider has sold the service and needs to provide post-sale support to its customer. When this doesn’t happen, this will lead to dissatisfaction.
Conclusion
Quite clearly, it is more difficult to manage a service business using only traditional marketing methods.
They should communicate with the customers in a clear and precise manner about the attractiveness and benefits of services. This includes informational content, promotional offers, advertisements, and other types of marketing materials.
However, a marketer can determine the level of personalization that the customer requires and that the company can support the same.
It is only then that trust is built and customers will be interested in buying the offered services.