Service Marketing Meaning, Importance, Challenges

Table of Contents: –

  1. Meaning of Service Marketing
  2. What is Service Marketing?
  3. Importance of Service Marketing
  4. Challenges in Service Marketing
  5. Issues in Service Marketing

Meaning of Service Marketing

Service marketing is a form of marketing based on building and nurturing relationships and emphasizing values. It may be used to market a service or a product also, Marketing a service-based business is different from marketing a goods-based business.

Marketing is taken as a function by which a marketer plans, promotes and delivers goods and services to customers or clients. In service marketing, the service providers are supposed to influence and satisfy the customers or users.

Service marketing is a form of marketing that focuses on the promotion and sale of services. Selling them can pose a challenge, as the marketing approach for them is much different than the approach for products. Some companies offer both products and services necessitating the utilization of a diverse range of approaches. 

For example, a store that sells computers also tends to help people select the right computer and offers computer repair services. Such a store must market its products and its supporting services to attract customers.

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What is Service Marketing?

When marketing services, the goal is not to get customers to buy a product but rather to encourage individuals to engage in business with a particular company, often in a specific location. For example, a restaurant offers a service that provides food to customers, both on-site and in the to-go form in many cases. When promoting a restaurant, it is important to convince people that it offers a superior experience compared to other restaurants and that its facility is truly worthwhile.

Just like the marketing of products, the marketing of services covers various aspects such as the offering itself, pricing, comparison with similar alternatives, and the reasons why people should choose that particular iteration over other options. In the realm of intangible services, consumers must be convinced through marketing that these offerings are not only essential but also hold significant benefits for them.

The following key points concerning the concept and perception of services marketing are as follows:

  1. It is an administrative process of managing the services.
  2. It is an organised effort to provide a sound foundation for the development of an organisation.
  3. It is a social process that helps an organisation to understand emerging social problems and to take part in the social transformation process to justify its existence in society.

Importance of Service Marketing

1) Environment-Friendly Technology

Of late, people find use of technologies even in the services sector since almost all the services are now found technology-driven. To be more specific the developed countries have been found to engage in similar practices. There is no doubt in it that people find a beginning even in India but it is at the nascent stage. The basic difference that they find in the nature and types of technologies used for managing and offering the services is its negligible or even dismal negative effects on the environment. The banking services, insurance services, education services, hostel services, tourism services, communication services, and by and large almost all the services are now technology-driven but environment friendly.

2) Paving Avenues for the Formation of Capital

To energise the process of development, one must speed up the process of capital formation so that the problem of inadequacy of financial resources is minimised. It is against this background that he needs to assign due weightage to the development of the services sector. Capital formation is substantially influenced by the contributions of production processes to the national economy. If the investments are found to be productive, one contributes substantially to the development process,

3) Creation and Expansion of Job Opportunities

The mounting problem of unemployment especially from the Indian perspective makes it essential that whatever development plans one formulates are instrumental in creating and expanding the job opportunities. People cannot deny that the development of the services sector would open doors, and search new vistas for the development of even those sectors which have either remained untapped or have partially been tapped.

4) Optimal Utilisation of Resources

The most important thing in the development process is to make the optimal possible utilisation of the different types of resources available in a country. Since people have been facing the problem of a non-optimal demographic structure, it is pertinent that they make an as such for the misuse of resources. In this context, they find services marketing important since this sector of the economy regulates the unproductive use of resources if dealt with properly. By service marketing, they prefer to use resources which remain unutilised or underutilised and generally try to stretch the resources.

5) Increasing the Standard of Living

The philosophy of development is coiled in the essence of improving the living conditions of the masses which in turn helps increase the standard of living. If one offers quality living conditions for the masses, the faculty of development would be proved to be productive. The qualitative developments in society are substantially influenced by the pattern or system of development adopted by the policymakers. If he turns his eyes to the standard of living of Indian society, of course, he finds himself far behind the developed countries.

For increasing the standard of living, it is only not essential that he makes available to the masses opportunities to earn more but it is also essential that he makes sincere efforts to increase public awareness so that they know how to spend, where to spend, what to eat, how much to eat, how to develop the personality, how to keep the health sound and so on. These things contribute significantly to improving the standard of living.

Challenges in Service Marketing

Various challenges faced in services marketing are as follows:

  1. Marketing Intangibles
  2. Developing Trust
  3. Maintaining Quality
  4. Emphasising Service Instead of Features
  5. Extra Competition
  6. Creating a Need
  7. Passion
  8. Momentum between Marketing and Sales
Challenges in Service Marketing

1) Challenges for Service Marketers

Service marketers face different challenges in marketing services, which are as follows:

i) Developing Trust

In the case of the service industry the customer first needs to develop trust in the service organisation before he buys their services. The client often gives more importance to the amount of faith he has in the service organisation than the services being offered and their value proposition. Marketers of services may have a more difficult time developing the trust of the prospect. For example, An insurance agent’s primary role is to effectively market the assurance that their company will fulfil its commitment when the need arises to settle a claim. If the agent does not appear trustworthy or if his company has a poor reputation, he will face challenges in convincing people to buy a policy.

ii) Emphasising Service Instead of Features

Marketers of services need to focus on the customer service aspect of their offerings rather than solely emphasizing the features. For example, instead of emphasising a multi-car discount or first accident forgiveness, which is offered by many insurance companies, the agent should make the prospect feel that personal attention will be given in the time of need, to ensure that the policy provisions are executed correctly.

iii) Maintaining Quality

Defining and improving quality within the service industry poses a major challenge. Unlike products, services are frequently produced and consumed simultaneously. As a result service quality management faces challenges that are not encountered in the product industry. In the product industry, the manufacturer is provided with ample opportunities to thoroughly test their products before their release into the market. In case of a quality issue, the problem is taken care of during the quality check process, and we prioritize customer satisfaction as our utmost concern. However, during service production, the customer is right in front as he takes centre stage. Guaranteeing customer satisfaction in this particular scenario poses a significant challenge.

iv) Passion

It works for the service industry. More spirit, passion, and desire among the service staff is the revenue generation and success generated every day. There exists a clear and undeniable correlation between staff passion and financial success and similarly, lack of passion leads to failure in the service industry. Staffs need to be constantly motivated and efforts have to be made to ensure their sustained dedication and engagement.

v) Extra Competition

Service companies are not only competing against other companies in the same market but they also find themselves competing against their potential customers. For example, A company that offers bookkeeping services for small businesses may run into a situation where the prospect decides to do the accounting to reduce costs.

vi) Momentum between Marketing and Sales

Marketing and sales lose momentum. Most product companies have dedicated marketers and sales professionals. They engage in continuous marketing and sales efforts, regardless of the revenue levels they generate. In many service companies, the marketers and sellers also must operate and deliver. This can often lead to the services revenue rollercoaster-wide swings between periods of excessive workload and periods of limited work availability. Most of the product companies have specialized sales teams responsible for driving sales. Coordinating marketing operations, and human resource efforts can be a challenging and time-consuming task.

vii) Creating a Need

Service marketers may have more of a challenge in creating a demand for their offerings. While an individual may understand the necessity to purchase a new car, such as when a current vehicle breaks down, the business owner may struggle to grasp the significance of investing in advertising. The salesperson must create a need for the service by showcasing real-life success stories of how other businesses increased revenues with an advertising campaign.

2) Challenges for Customers

Purchasing of services involves the acquisition of services to satisfy an identified need which cannot be satisfied with tangible products, e.g, maintenance services, postal services insurance services, medical services, security, etc., these types of services are unavoidable, they are necessities for the day-to-day operation of a business.

The acquisition of goods has its peculiar problems which makes it necessary for the buyer to be very cautious when acquiring services for his organisation.

Such challenges include:

i) Intangibility of Services

The intangibility of services makes them low on search attributes. Unlike physical goods, they cannot be seen, felt, touched, or tasted. Also due to intangibility, services cannot be effectively demonstrated or illustrated. One must experience the services before making any assessment or judgment about it. The obvious consequence of intangibility therefore on the customer is he or she acts in the situation of an information vacuum. The lack of information entails risk and uncertainty about the nature and the consequence of service purchase.

ii) Lack of Uniformity in Service Products

Uniformity in service products is difficult to achieve. It happens due to variations in service personnel performance, consumer involvement in the production process and other situational factors. When buying a physical product, a customer can be sure of what he or she is likely to get in the purchase. However, when purchasing services,  one cannot be sure of service performance. The level of service performance may vary across customers and across time.

For example, when a customer has used a cake of Lux, he or she can be sure what to expect in the next purchase of the soap. However, this may not hold for services. For example, a haircut may be consistently performed in a repeated purchase. Each time when a customer gets seated on the salon chair, doubt and uncertainty hover in the mind as to what kind of cut would be done this time, and each time every service experience tends to be unique. Making it challenging to consistently deliver the same level of performance in the future.

iii) Difficulty in Comparison

When one purchases a product, the specifications are often easy to define In some cases, you may be getting the same product from any supplier. Providing services can be quite challenging, especially when they are intangible. Think of legal services. When one is in discussions with several highly competent law firms, deciding which one gives the best chance of winning a patent infringement lawsuit is often a subjective matter of judgement.

v) Price

The difficulty in determining the quantity of services creates another problem of determining the unit prices per service, hence the problems of costing services.

vii) Quantity

Services cannot easily be quantified, ie, it is difficult to determine the number of services and therefore buyers find it difficult if not impossible to establish the number of services consumed daily, weekly, monthly or annually. This makes it difficult for the buyers to specify the quantity of service required by any service provider (supplier), however, this problem can be tackled by considering the number of output per service provider or the number of hours, days, weeks, months or years worked or to work (serve) by the service provider.

viii) Quality

The quality of services cannot be specified in advance by any buyer, services can only be described and therefore the problem of tangible criteria for evaluating the quality of a supplier’s service is becoming a matter of concern to the buyer.

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