Services marketing is a sub field of marketing, which can be split into the two main areas of goods marketing (which includes the marketing of fast moving consumer goods (FMCG) and durables) and services marketing. Services marketing typically refers to both business to consumer (B2C) and business to business (B2B) services, and includes marketing of services like telecommunications services, financial services, all types of hospitality services, car rental services, air travel, health care services and professional services. The range of approaches and expressions of a marketing idea developed with the hope that it be effective in conveying the ideas to the diverse population of people who receive it.

Services are economic activities offered by one party to another. Often time-based, performances bring about desired results to recipients, objects, or other assets for which purchasers have responsibility. In exchange for money, time, and effort, service customers expect value from access to goods, labor, professional skills, facilities, networks, and systems; but they do not normally take ownership of any of the physical elements involved.[1]

There has been a long academic debate on what makes services different from goods. The historical perspective in the late-eighteen and early-nineteenth centuries focused on creation and possession of wealth. Classical economists contended that goods were objects of value over which ownership rights could be established and exchanged. Ownership implied tangible possession of an object that had been acquired through purchase, barter or gift from the producer or previous owner and was legally identifiable as the property of the current owner.

Adam Smith’s famous book, The Wealth of Nations, published in Great Britain in 1776, distinguished between the outputs of what he termed “productive” and “unproductive” labor. The former, he stated, produced goods that could be stored after production and subsequently exchanged for money or other items of value. But unproductive labor, however” honorable,...useful, or... necessary” created services that perished at the time of production and therefore didn’t contribute to wealth. Building on this theme, French economist Jean-Baptiste Say argued that production and consumption were inseparable in services, coining the term “immaterial products” to describe them.

[edit] Alternative View

A recently proposed alternative view is that services involve a form of rental through which customers can obtain benefits.[2] What customers value and are willing to pay for are desired experiences and solutions. The term, rent, can be used as a general term to describe payment made for use of something or access to skills and expertise, facilities or networks (usually for a defined period of time), instead of buying it outright (which is not even possible in many instances).[3][4]

There are five broad categories within the non-ownership framework

1. Rented goods services: These services enable customers to obtain the temporary right to use a physical good that they prefer not to own (e.g. boats, costumes)

2. Defined space and place rentals: These services obtain use of a defined portion of a larger space in a building, vehicle or other area which can be an end in its own right (e.g. storage container in a warehouse) or simply a means to an end (e.g. table in a restaurant, seat in an aircraft)

3. Labor and expertise rental: People are hired to perform work that customers either choose not to do for themselves (e.g. cleaning the house) or are unable to do due to the lack of expertise, tools and skills (e.g. car repairs, surgery)

4. Access to shared physical environments: These environments can be indoors or outdoors where customers rent the right to share the use of the environment (e.g. museums, theme parks, gyms, golf courses).

5. Access to and usage of systems and networks: Customers rent the right to participate in a specified network such as telecommunications, utilities, banking or insurance, with different fees for varying levels of access

services marketing

People use an array of services everyday, although some - like talking on the phone, using a credit card, taking a

bus ride, or withdrawing money from an ATM - may be so routine that you hardly notice them unless something

goes wrong.

Other service purchases may involve more forethought and may be more memorable - for instance, booking a

cruise vacation, getting financial advice, or having a medical examination. Your use of these services is an

example of service consumption at the individual, or business-to-consumer (B2C), level.

Organisations also use a wide array of business-to-business (B2B) services, varying to some degree according

to the nature of their industry, but usually involving purchases of a much larger scale than those made by

individuals or families. Nowadays, firms are outsourcing more and more tasks to external service providers in

order to focus on their core business.

What are services? The formal definition is services are an economic activity offered by one party to another,

most commonly employing time-based performances to bring about desired results in recipients themselves or in

objects or other assets for which purchasers have responsibility. Time-based means something the firm does,

which is within a certain time period. Desired results are outcomes desired by the customer. For example, you go

to a theatre to be entertained and to a university to get an education. These are the desired results.

In exchange for their money, time and effort, service customers expect to obtain value from access to goods,

labour, professional skills, facilities, networks and systems. However, they do not normally take ownership of any

of the physical elements involved (Lovelock and Wirtz 2011).

What is so special about services marketing? Services marketing focuses on the distinctive characteristics of

services and how they affect both customer behaviour and marketing strategy. For example, many services are

produced and delivered with the customer present at the service firm’s facility.

The presence of the customer in the service facility means that capacity management becomes an important

driver of the firm’s profitability. For example, if too few customers are present, the high fixed costs of operating

and staffing the facility cannot be covered, and if too many customers show up, their service experience often

deteriorates and customers who have to be turned away may not want to come back.

To address this constant struggle of having the right number of customers show up, pricing of services tends to

be highly dynamic and complicated – think of the pricing of airline tickets and all the terms and conditions

attached to a discounted ticket. Prices change all the time, and typically dependent on when you travel, how long

in advance you make your booking, how long you stay at the destination, whether the ticket is flexible and allows

for changes in travel dates and itinerary, and whether it is refundable. Such pricing is also called revenue

management or yield management.

In services marketing, the traditional 4Ps of the marketing mix (product, pricing, promotion/market

communications, place/distribution) are adapted to the distinctive features of services. Then, there are the 3

additional Ps of services marketing: people, physical evidence and process.

The process of service delivery is often as important as the function of the service. A service is a process from

the organisation’s point of view, but an experience from the customers perspective. The quality of the experience

is a function of the careful design of customer service processes, adoption of standardised procedures, rigorous

management of service quality, high standards of training and automation. Services marketing helps to ensure

that these processes are designed from the customer’s perspective.

Physical environment includes the appearance of buildings, landscaping, interior furnishing, equipment, uniforms,

signs, printed materials and other visible cues that provide evidence of service quality and guide customers

through the service process. The design on the physical environment can have a profound impact on customer

satisfaction and service productivity.

People refer to the frontline employees of the firm. From a customer’s point of view, when service employees are

involved, the people are the service. This means that frontline employees need to possess the required technical

and interpersonal skills and a positive attitude. People can be a key competitive advantage for many service

firms.

Services marketing includes building customer loyalty, managing relationships, complaint handling, improving

service quality and productivity of service operations, and how to become a service leader in your industry.

Example

Imagine you want to open a new restaurant. Services marketing would then guide you on how to develop the 7Ps

including the:

Core product: What is your value proposition? What sort of dining experience you wish to deliver, for example, one that is ideal for romantic fine-dining or business lunches?

Pricing: What price levels and menu designs you want to offer such as lower priced off-peak menu? Promotion/market communications: How to reach your target audience and shape their visitation

behaviour? Place: Where do you locate your restaurant? People: How do you select, train, motivate and retain your front-line employees? Physical evidence: What will the interior of the restaurant look like? Process: How do you design service processes to satisfy customers? This can range from seating

to preparing the bill?

Services marketing would also help guide your thinking about how to develop long-term profitable relationships

with your customers, design complaint handling and service recovery processes and policies, help you to

systematically improve the quality of your service and the productivity of the entire operations. [1]