Modern markets are flooded with various products, services and combinations of the two. The majority of Western economies are made up of 60%-70% services, making it the most important sector in most developed nations. Recently, services have become even more influential due to their combination with products to create hybrid products, such as take-away meals, and have even been used as part of the augmented product, including things like warranties and repairs. Owing to services rise to prominence, marketers have been eager to characterise the sector in an attempt to outline the key aspects common to all services, to then be able to adapt marketing strategies accordingly.
The first and most significant characteristic is the fact that services are intangible by nature. Unlike products, humans are not able to physically evaluate services before purchase. For example with a product, one is able to take it off the shelf and use their senses to examine its quality, whereas with services there is no physical item to examine, especially not before purchase. As a service is an act or performance that is difficult to evaluate due to lack of physical features, marketers aim to provide tangible cues around the service, to aid their customers in assessing the quality of provision beforehand. These cues can be both intrinsic and extrinsic, depending on the type of service. The former includes aspects like displayed industry reviews and ratings. The latter comprises of things like price, a definitive differentiating tool in the services sector, as well as promotional activities and referrals, I order to convince customers.
Another aspect which one should be wary of when discussing services relates to the inseparability of production and consumption. Service providers produce the performance whilst simultaneously, customers consume whatever benefit they are gaining from the service. This is essential to understand in order to provide the best experience for one’s customers. For this reason, the proper selection, training and rewarding of staff is vital, so that they are well informed on how to act positively around customers. Almost as important, is the need to avoid inter-customer conflict. For example, if one customer is shouting and using abusive language, it might influence other consumers in a negative manner and defer them away from being potential buyers. Marketers and managers attempt to overcome this by training the staff to be flexible in their behaviour and therefore be able to handle potential problems, relating to customer conflict.
As previously demonstrated, service providers need to initially and constantly deliver the same excellent service. This is easier said than done, as we as humans make mistakes and have emotions which can influence heavily on our performance, therefore making service provision very variable. To combat this variability and attempt to standardise processes managers must attempt to hire perfectly positive staff that are able to put on a happy face no matter what their mood is. The rewarding of staff is also a good way to constantly motivate positive performance. Recent technological advances have created redundancies where jobs involving hardcopy work once existed. This allows for a much smoother and sequential standardisation of all the processes involved in the service. Finally, due to the variability of consumer perceptions, marketers also resort to continuous customer evaluation forms, in order to try and understand what collective dislikes reside in their clients.
Products, with the exception of food, are not perishable and can typically be stored until their sale date. This allows for as little waste as possible as supply can normally meet demand. However, in the service sector offers are perishable. For example, a hotel room is available during a period of time, but if no one uses it during that period, the time and potential profits that could have been made are forever lost. This makes it essential to endeavour to match supply and demand, applying any effective means possible. One strategy that is widely applied is that of a differential pricing scheme. This is where companies attempt to stimulate demand by lowering their prices during off-peak times, a good example being train services not during rush hour. Staff are also useful, using part time workers during off peak periods and more capable multi-skilled employees during times of high demand. Technology is also very practical, seeing as modern day reservation systems can process a lot of data, with an easy to use interface. This same system can be updated using information retrieved from customers for further future development.
The final and most brief of the characteristics is the notion that there is a perceived lack of ownership, from the viewpoint of the customer. This is due to the ephemerality of the service. In addition to this short lived experience, the fact services are intangible means that customers only retain a memory of the act or performance they witnessed. For this reason, service marketers have attempted to give away tangible products, along with their service, in order to remind their customers of their experience and entice them to return. Examples of this can be seen at concerts in the form of t-shirt memorabilia or at supermarkets with their membership discount cards.
As one can see, services characteristics cause it to be a hard to exploit and very volatile sector, with much change constantly occurring. The intangibility of service nature is the most prominent characteristic for marketers who have to attempt to overcome its challenges, by materialising the offering through subtle cues. Change is also continuously present, seeing as perishability and variability are aspects of services, meaning there is a constant effort towards standardisation and matching demand. Finally, services rely heavily on employees to execute the performance and use staff to attempt to diffuse any potential disturbances. In conclusion, there are many different variables to take account of when entering a service market, some being conscious, although a good part being subconscious cues applied to subtly win over customers.