Product and services marketing

Modified: 16th May 2017
Wordcount: 1016 words

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Characteristics of products and services are different. These fundamental differences require a different marketing approach and strategy in order to successfully market the products or services. Products are essentially tangible and they can be touched, felt, smelled, tasted and heard. Consumers can therefore sample the product prior to purchase and marketers can make use of these five senses as part of their marketing strategy in order to get consumers to sample the product in question. Services on the other hand have different characteristics which make them different from products. They are intangible, inseparable, heterogeneous/variable and perishable (LOE 2009) while product marketing largely deals with products that are tangible, separable, homogenous, non perishable. As such services unlike products cannot be touched, felt, tasted, smelled or heard prior to purchase. The challenge for marketers is that services cannot be sampled prior to purchase and marketers are trying to sell an experience rather than a product that consumers can see before them.

These characteristics that distinguish service marketing from product marketing impact marketing strategies. These characteristics according to LOE 2009 are:

Intangibility – services cannot be referenced using the five senses of touch, smell, hearing, feeling and taste. As with products, service cannot be displayed and this in turn makes advertising more challenging as consumers cannot actually “see” the service being sold. Marketing tools are therefore required to make the intangible a bit more tangible so that customers are better equipped to make choices such as using testimonials of former guests in the case of a hotel, or associating the service with positive feelings such as joy and happiness. Marketers therefore have to manipulate the marketing mix. Pricing can also be challenging, because customers “don’t know” what they are paying for and marketers need to convince consumers that the service provides value for money and is worth its price. Whereas with tangible products you go in purchase a television for example, and you can also test it before you leave, services lack that tangible element, and this may result in uncertainty in customer buying behaviours and consumers may require more convincing than with conventional products. With services the brand is driven by the company (for example the Ritz is synonymous with unrivalled service) whereas with products, the products themselves largely drive the brand.

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Inseparability – with services production and consumption is simultaneous (LOE 2009) whereas with products, consumption takes place after production. Therefore a key difference between services and products is the consumer and provider interaction. According to Moeller 2010 pg 362 ‘services are first sold then produced and consumed simultaneously whereas goods are first produced then sold then consumed.” With regards to marketing this presents a challenge in that customers and service personnel are both part of the consumption and resultant experience. According to Gronroos 1998 ” If a service firm wants to keep its customers, the marketing effect of the simultaneous service production and consumption processes, must be positive and is critical to the customers’ perception of the service and consequently to their long-term purchasing behavior pg 322;323″.

Variability – The inseparable nature of services as discussed above also results in variability/heterogeneity of services. This is because services and their quality are highly dependent on who provides them as well as where, how, when and to whom. A moody concierge could spoil the experience of a hotel guest while a moody customer could in turn spoil his own experience but then associate the brand with negative experiences. Customer involvement in service provision provides a different set of challenges for marketers. Quality control is more difficult and service provision can be inconsistent as it is dependent on different people and difficult elements and therefore difficult to standardise. Ambience and location, need to be customer centric while training of service personnel is key to ensure and maintain quality. In order to address this variability, marketers can incorporate self service as a key component. Hotels and fast food outlets make use of service manuals detailing greeting methods and how to handle complaints in an attempt to make service more uniform. Marketers have to manage each element of the service process as it has a significant bearing on customer satisfaction and brand success.

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Perishability- Services cannot be stored as inventory or stockpiled for later use (Moeller 2010), (Kotler 1997). For example a hotel room or airline seat that goes unoccupied overnight or during a flight, the revenue is lost forever. Therefore matching supply with demand is quite challenging. This challenges marketers as there is increased pressure to produce results; numerous vacant seats on a flight for example could symbolise a weak element in the marketing strategy. Moreover, supply and demand can also be seasonal for certain services eg during holiday seasons there is high demand for flights and hotel rooms while this demand significantly drops during other times. Services marketers, unlike with tangible goods, may require a different pricing system such as reduced rates during off peak seasons in order to encourage demand and limit or eliminate vacant seats or rooms. This also affects staff requirements, whereas with a tangible product, you are aware of the staff requirements to produce a given number of products, with services a demanding customer could negatively affect the labour balance.

According to Chernatonay and Segal-Horn (2001:645) “services branding, unlike product branding, is more about internal consistency, places more emphasis on managing the total services brand experience and is more about social processes.”

 

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