Month: September 2020

The term ‘service product’ encompasses a myriad of different types of services. The definition proposed is still one of the most effective in capturing the key distinguishing characteristics of different types of service products: ‘A service is an intangible product involving a deed, a performance, or an effort that cannot be physically possessed.’

There is little doubt that both intangibility and non-ownership are key characteristics of service products, although other characteristics are important. Staying with Berry’s definition, if we can see that the product is essentially intangible then the customer does not take physical possession. There are, however, tangible elements to the product of a flight: the aeroplane itself, the seat we occupy, the meals and drinks we are served are tangible aspects of the air travel product. In addition, we do take ‘physical possession’ of certain elements of the product, e.g. the seat, the meals and drinks.

However, the core benefit that the customer is purchasing is essentially intangible. This example shows that most products have a mixture of both tangible and intangible components. If we think of tangibility as a continuum, service products are those where the intangible element is predominant. This idea of a continuum of intangibility is frequently encountered in texts on services marketing and is a useful way of evaluating whether the customer is buying what is essentially a tangible product or a service. An example for business products/services adapted from Shostack2. A list of examples of where the intangible element is dominant, and hence examples of what we define as service products, includes:

• Fast food;
• Hotels;
• Holidays;
• Travel;
• Insurance and banking;
• Education;
• Health care;
• Public transport;
• Legal/financial advice;
• Consultancy;
• Personal health and beauty.

There are numerous different service products. An important fact to note is that although they are usually relatively easy for the marketer to classify as being service or non-service products, ultimately it is the customer who decides whether or not a product or service is being purchased, and hence marketed, according to the relative importance attached to the tangible versus intangible elements.

A continuum of tangibility and intangibility: business/product service classifications.

Intangibility is certainly one of the key characteristics that distinguishes service products from tangible products. What about the notion of ‘non-possession’ referred to in Berry’s definition, and what are the other distinguishing or special characteristics of service products? These other suggested special characteristics of service products, including the aspect of non-possession, or non-ownership, are now outlined. As with the characteristic of tangibility these so-called ‘special characteristics’ are a matter of degree and best thought of as a continuum. For each of these characteristics we have outlined the marketing implications and issues to which these characteristics give rise.

Non-ownership

As explained in the air travel example a characteristic of many services is that they are used rather than owned. Another example is a holiday where we simply use the services of the holiday provider as opposed to taking physical possession of a product.

Non-ownership can sometimes make it difficult for a customer to assess and appreciate the advantages of purchasing the service. The marketer therefore needs to pay particular attention in emphasizing benefits of non-ownership, such as no long-term commitment and inexpensive maintenance in promotional programmes.

At one time few private car buyers in the UK would have considered leasing a car on a long-term basis as opposed to purchasing one either outright or on credit. However, partly as a way to help customers finance the use of a car, over the last ten years the majority of the major car manufacturers have introduced what effectively are leasing schemes albeit often under other names. An increasing number of customers not only find this a more convenient way of covering the costs of having access to a new car, but also find there are many benefits to not actually taking ownership of a vehicle.

Sometimes the biggest resistance to innovation comes from the person who should benefit most from it the customer. Customers can be very conservative. When you come along with an unorthodox new product or service they are often initially unimpressed. Why should the buyer take a risk with your unproven new gismo? He knows that new products often have bugs and he does not want to be the guinea pig on which you experiment. He is familiar with the current method, why should he change?

Who would want to be the first customer for a fax machine or indeed for a telephone? It seems ridiculous now but selling the first few telephones must have been really difficult. And how about laser eye treatment? How would you find the first person to try it when there was a safe alternative in a pair of spectacles?

This is understandable and needs careful handling. Your sales people will doubtless be adept at explaining the benefits of your new products but the customer is right to be sceptical. You need to find ways to reassure him and to mitigate his risk.

At the same time you need early adopters so that you can get some traction in the market, customer feedback and positive references for your innovation. So acknowledge the client’s concerns and put offers in place to allay them. You cannot just use your standard terms and conditions for a radical new product. You have to be innovative in your sales approach too. For example you could:

• Allow them a free trial of the new product
• Continue to provide the old service so that they can go back to it at any time.
• Offer a money back guarantee.
• Provide a special service level that gives them immediate access to your top support experts.
• Agree joint service level agreements.
• Stress the payback and benefits they will receive and even make payment dependent on their being achieved.
• Promise to arrange a positive PR result for them in the trade press if the trial succeeds.

Above all you must choose the right early customers. Some people love new technology and others hate it. Select the best early adopters from among your top clients. Appeal to their sense of pioneering adventure. Stress the prestige that goes with early success for both of you. Make sure that they share in the recognition of a successful launch. If all goes well then ask them for a testimonial. You can help them be seen as an industry leader in trade journal stories and at conferences. You are in it together and it must be a win/win for both parties.

Entrepreneurs and business owners can do to engage customers in the change process, so they feel more like a partner and stakeholder in the changes:

1. Analyze concerns from the customers’ point of view: The buy-in to the change happens in the mind of the other person. While regulatory and legislative changes may seem easy to enforce, most customers aren’t that interested in the reasons why something has to happen a certain way – they just want to have their needs met. Get your customers involved right from the beginning by testing out the changes with them. Walk them through the changes and requirements while discussing benefits.

Most importantly, listen to their concerns. You may not be able to solve all of them, but listening and acknowledging your customers’ concerns will often still move people down the path to accept your changes.

2. Engage your customers in your ecosystem: Quite often, one change within the system will impact other areas of the system. Think of your business as a full ecosystem that is living and breathing. Ask your customers what is their experience at every encounter within this ecosystem.

Also, gather metrics on how, when, where, and why do they use your product. Provide incentives and ask your customers to share their experience online about your new product or service. This helps create a self-sustaining business ecosystem with your customers selling your product for you.

3. Don’t assume connectivity: As technological change increases, those of us in larger urban centres may assume that everyone else has the same level of connectivity. Customers with lower connectivity must be facilitated too.

Be sure to have a technical workaround so consumers who live in an area with lower bandwidth have a great customer experience as well.

4. Build real intelligence: Make sure you are using the right metrics to measure the success of your business. While we might think of sales as a success metric, that alone will not necessarily tell you if your changes are successful. If your customer bought something but never came back, is that a sign of success for your particular business? Tracking continuing customer engagement with your company as well will give you a clearer picture of how successful your change was.

5. Maintain data accuracy: Ask the right questions. Ensure customers have real time access to tracking, shipping information, profile information, and other pieces of information that are relevant to your product or service. Read between the lines of percentages. For example, if 60% of your customers liked the product, but that number only accounts for a small number of people, the data is meaningless.

Also, take both quantitative and qualitative data into account. Anecdotal evidence can be just as strong as hard data and signify trends you should pay attention to.

6. Manage expectations: Be very clear with your customers about what they can expect through every step of their customer journey. Don’t be afraid to make it simple and spell it out for them. People going through all types of changes want to know what the future will hold, what will stay the same, and what will change.

For example, when someone subscribes to your newsletter, tell them what they can expect each month, and express how grateful you are that they are sharing this journey with you. Anticipate and share the challenges. Help the customer predict the future.

7. Develop a strong customer relationship: Remember, buying strategies have changed. Your customers have access to more choices than ever. Develop and maintain a strong relationship with them. Make your customer feel like they are on the same team as you, and not simply a consumer of your products. Tell them what you will be accountable for and what you will provide. Help them create ownership with your product, service, and company.

The approach towards customer service delivery can play a big role in your business success. There are plenty of ways to handle customer service delivery, but the strategies behind them can be broadly described as high-contact services and low-contact services.

High-Contact Services

In high contact, service entails interactions throughout service delivery between customers and the organization. The customer’s exposure to the service provider takes on physical and tangible nature. When a customer visits the facility where service is delivered, If they enter the service “factory” something that rarely happens in a manufacturing environment. Viewed from this perspective, a motel is a lodging factory, a hospital is a health treatment factory, an airline is a flying transportation factory, and a restaurant is a food service factory. Because these industries mainly focus on “processing” people rather than inanimate the objects, the marketing challenge is to make the experience appealing to customers in the physical environment and their interactions with service executives. During the course of service delivery, customers are usually exposed to many physical clues about the organization the exterior and interior of its building, equipment, furnishings, appearance, and behavior of service personnel and even other customers.

Low-Contact Services

Low-Contact Services are generally the opposite end of the spectrum, low-contact services involve little, if any, physical contact between customers and service providers or executives. In most cases, the contact takes place at arm’s length through the medium of the Internet or physical distribution channels. It is a fast-growing trend in today’s more convenience-oriented society. Many high-contact and medium-contact services are being transformed into low-contact services why? because to more convenient for the customers. Nowadays customers are conducting their insurance or banking transactions by mail, telephone, and the Internet or research and purchase a host of information-based services by visiting web sites rather than bricks-and-mortar facilities (traditional stores).

Difference between High & Low Customer Contact Service

Your approach to customer service can play a big part in the success of your business. There are plenty of ways to handle customer service, but the strategies behind them can be broadly described as high-contact or low-contact. High-contact service means you offer your customers a lot of hand-holding and direct support, while low-contact service means you give them tools to sort things out for themselves. They’re both valid options, so the real question is which approach will work best for you and your clients.

Customer Information Gathering

The level of information you gather to address customer problems will vary, depending on the level of customer service you provide. If you opt for low-contact customer service, you’ll address customer concerns and problems as they come up. This strategy typically doesn’t gather a lot of information to identify specific solutions.

For example, a jewelry store fixes watches as they break. The store does not collect information on the problem to create any kind of problem solving work flow. High-contact customer service, however, analyzes customer complaints to create solutions. For example, if you have a software company you’ll analyze your customers’ problems to find easy solutions for the next time a customer has the same experience.

Customer Access to Employees

The strategy you choose decides how much access a customer has to your employees. Low-contact customer service typically keeps customers at arm’s length, dealing with entry-level service reps and seldom reaching top-level managers or executives when a problem occurs. High-contact customer service offers the customer an opportunity, if needed, to speak to employees higher up the chain of command.

For example, if a customer’s new luxury car continuously breaks down after he purchases it, he potentially can speak to a vice president or owner at the dealership from which he purchased the car to discuss the problem.

Customer Interaction with the Company

The way customers interact with your company differs between high and low touch customer service programs. With low-touch customer service, customers often don’t speak directly with a human at all. For example, you might only offer an email address as your point of contact when a customer needs help with a problem.

High-touch customer service typically offers a call center or a representative to meet the customer and fix the problem. For example, if a customer has problems with his cable television and a service technician is sent to his home, this is high-touch customer service.

Customer Service Availability

Problems with products and services happen at any time of the day, and your choice of high or low contact customer service dictates what kind of response your clients can expect. If you opt for low-contact customer service, customers typically can’t contact a representative outside of business hours. High-contact customer service typically uses 24-hour call centers and help lines for customer problems.

Service recovery refers to the ‘actions taken by an organisation in response to a service failure’. Failures occur for all kinds of reasons the service may be unavailable when promised, it may be delivered late or too slowly, the outcome may be incorrect or poorly executed, or employees may be rude or uncaring. All of these types of failures bring about negative feelings and responses from customers.

The goal of service recovery is to identify customers with issues and then to address those issues to the customers’ satisfaction to promote customer retention. However, service recovery doesn’t just happen. It is a systematic business process that must be designed properly and implemented in an organization. Perhaps more importantly, the organizational culture must be supportive of idea that customers are important and their voice has value.

Research has shown that the customers who, have had a service failure resolved quickly and properly, are more loyal to a company than the customers who have never had a service failure significantly more loyal. Service Recovery practices are a critical element in a Customer Loyalty Program.

Think about your own experiences with service or product problems. Did you get a quick acknowledgement of the problem, speedy resolution of the problem, and perhaps compensation for your troubles? (Imagine if you got a truly sincere apology and not some phony empathy?) Weren’t you more likely to buy from that company again because of the confidence you now had in their business practices? That’s the key value to effective service recovery and complaint handling customer retention.

One way to think about service recovery is that it is a positive approach to complaint handling. Complaint handling has serious negative connotations; whereas, service recovery has positive connotations. Complaint handling is placating people, minimizing a negative. Service recovery practices are a means to achieve the potential, latent value a customer holds for a company by fostering an ongoing positive relationship. Service recovery has a secondary value. It creates positive word-of-mouth about your company and minimizes the bad spin that lack of service recovery practices can create.

The Service Recovery Paradox Theory:

The recovery paradox theory advances the contention that if a service firm exhibits an excellent recovery in the event of a service failure, then the customer’s satisfaction may exceed pre-failure levels. While a number of researchers have provided evidence in support of the recover paradox, several recent studies have failed to find such support.

This study theoretically and empirically examines factors that moderate the occurrence of a ‘recovery paradox’ in the event of a service failure. Research findings indicate that, under appropriate conditions, a customer can experience a paradoxical satisfaction increase after a service failure.

Certainly, the recovery paradox is more complex than it may seem on the surface. First of all, it is expensive to fix mistakes, and it would appear somewhat ludicrous to encourage, service failures after all, we know that reliability (“doing it right the first time”) is the most critical determinant of service quality across industries. Second, empirical research suggests that only under the very highest levels of customers’ service recovery ratings we shall observe increased satisfaction and loyalty.

This research suggests that customers weigh their most recent experience heavily in their determination of whether to buy again. If the experience is negative, overall feelings about the company will decrease and repurchase intentions will also diminish significantly. Unless the recovery effort is absolutely superlative, it cannot overcome the negative impression of the initial experience” enough to build repurchase intentions beyond where they would be if the service had been provided correctly in the first place.

These conclusions are somewhat complicated by a recent study that shows no support at all for the recovery paradox. In the context of that study, overall satisfaction was consistently lower for those customers who had experienced a service failure than for those who had experienced no failure, no matter what the recovery effort was. An explanation for why no recovery paradox occurred is suggested by the magnitude of the service failure in this study a three-hour aeroplane flight delay. This type of failure may be too much to be overcome by any recovery effort. Even in this study, however, strong service recovery was able to mitigate, if not reverse, the effects of the failure by reducing overall dissatisfaction.

Given the somewhat mixed opinions on whether a recovery paradox exists, it is safe to say “doing it right the first time” is still the best and safest strategy. However, when a failure does occur, every effort at a superior recovery should be made to mitigate its negative effects. In cases where the failure can be fully overcome, the failure is less critical, or the recovery effort is clearly superlative, it may be possible to observe evidence of the recovery paradox.

Basically, how do consumers respond to service firm efforts to recover from inevitable service failures such as cable not working in a hotel room or unsatisfactory service in a rest section rant. If the service firm can put in order the situation quickly and to the satisfaction of the consumer, overall satisfaction can occur. When there are excessive service failures, it is unlikely the firm can recover.

Why does Service Recovery get no Respect?

So why service recovery part of every organizations’ business isn’t processes? No easy answer exists. Perhaps it’s the contention between operations and marketing.

(i) Customer Acquisition is Attractive: Marketing conducts expensive research, fine tunes the 4Ps that comprise its marketing strategy (Product, Place, Promotion, and Price), and penetrates new customer bases through its sales and marketing programs. Companies spend big bucks on achieving sales growth and expanding market share.

(ii) Service Recovery isn’t Attractive: It’s an operational task that involves negotiating with angry customers. The budget typically falls in the customer service department one of those loathsome cost centres that drain profit. Isn’t it easier to just dismiss these upset customers and move on to greener fields?

In some cases, probably it is easier and appropriate. Some customers cannot be recovered, only ameliorated so they don’t bad mouth the organization. This may seem like heresy from a self-proclaimed customer service nut, but customers are not always right. (Great Brook had a person from a Pacific Island nation who contacted us to buy our Customer Survey book. They weren’t willing to pay prior to shipment; they wanted to be invoiced. And they wanted an electronic copy of the book. We declined their business.)

However, most customers can be recovered through simple application of the Golden Rule, and those recovered and retained customers become profit centres. They buy more and they give positive recommendations to friends and colleagues, which is the most important form of “advertising.”

For a rough calculation on the potential value of a Service Recovery Program in your organization, find out the annual sales volume per customer, then apply the operating profit margin to find the profit per customer. Next, find out the annual customer churn, i.e., how many customers stopped buying from you—especially long-standing customers.

Multiply, the churn by the profit margin and you have the potential value of the Service Recovery Program’s annual budget. You’ll probably find that even reducing a small amount of the churn will more than pay for the program. And this doesn’t even include the reduced sales from customers who didn’t leave but still have stayed with the organization!

Stages of Service Recovery Maturity:

Service Recovery in an organization progresses through a series of stages as shown in the Figure.

(i) Stage 1: Moribund: There is no complaint handling. Angry customers are ignored. Drugstore.com is an example of a company with totally moribund service recovery practices. Letters to VPs and even the CEO about a damaged shipment go unanswered.

(ii) Stage 2: Reactive: Customer complaints are heard, and a response is made. But it’s a haphazard process with no defined goals for the response, and no one owning this business process.

(iii) Stage 3: Active Listening: At this stage, the response to issues voiced by customers is structured. Specific people have the responsibility to respond to complaints and guidelines are in place for the response. However, it is still reactive.

(iv) Stage 4: Solicitous: The critical change from Stage 3 to 4 is the move from reactive to proactive solicitation of customers with issues. The reason is that most customers don’t bother to complain. They just move on to other suppliers of products. Haven’t we all done this? It’s a lot of work to complain! The solicitous role is accomplished by encouraging customer to voice their complaints.

Event surveys (also known as transactional or transaction-driven survey) are a commonly used technique to get issues voiced. The survey design must be such that more than just high level measurement of customer satisfaction is captured. The design must allow for action to be taken. The desire for anonymity complicates the task.

(v) Stage 5: Infused: The pinnacle of Service Recovery Practices is achieved when the complaint identification merges with business process improvement or six sigma programs to support root cause identification and resolution. The owners of business processes that cause customer issues are notified of the occurrences to prompt reexamination of the process design.

In essence, we see two levels of feedback loops. First, feedback from the customer to the organization. Second, feedback from the customer-facing groups to its business partners within the organization. While company culture is clearly critical to implementing this level of feedback management, certain technologies can infuse this information sharing into business practice.

Like motivation, involvement too is an internal state of mind which a consumer experiences. It makes one analyze and rationalize his/her choice. Involvement of consumers can be induced by external sources and agencies. Involvement is the embodiment of time, effort, consideration given and the enjoyment that is derived by consumer while choosing a product or service.

The involvement theory holds that there are low and high involvement purchases. Consumers’ involvement depends on the degree of involvement of purchase to a consumer. For example, while buying a loaf of bread, the consumer does not feel very much involved. It is because the life of the product is very short. Once it is consumed, it gets exhausted. If the consumer is not satisfied with the particular bread brand, he will purchase some other brand next time.

In the case of purchase of consumer durable (Laptop, refrigerator, household furniture, two wheeler etc.), the involvement of the consumer in making the purchase decision is high. Consumers take a decision after much deliberations. These products have long-term consequences. Consumers make lot of inquiries before they purchase the products which have a high degree of involvement.

The following table shows various degrees of involvement depending upon the nature of the product or service.

Types of consumer involvement in buying or Servicing

Certain factors affect the degree of involvement of buyers in making purchase decisions. These include their level of knowledge, information, psychology, culture, lifestyle, social system, etc. Even for the same product or service the degree of involvement of an individual may vary depending upon the circumstances. There are five types of involvement.

1. Ego involvement

Ego involvement is intended to satisfy one’s ego. For example, all the members of the family involve themselves in purchasing a product for a single member belonging to that family. Wife involves herself in the purchase of garments for her husband and husband involves himself in the purchase of cosmetics for his wife. Sons and daughters of the family significantly influence the purchase of laptop, TV, car, household furniture, etc. The ego of each family member is satisfied by consulting him/her before the purchase.

2. Commitment

Commitment is another important form of involvement. When a member of the family falls sick, the other family members are committed to arrange medical treatment for the suffering members. Similarly, functions like marriages entail the commitment of the entire family.

3. Communication in involvement

Communication involvement signifies sharing the available information with others in the family or organization. If one member has some information on the subject matter of decision, he should communicate it with the other members before arriving at a decision.

4. Purchase importance

Involvement of individuals depends upon the degree of importance of purchase. Suppose e flat costing lakhs of rupees is purchased, then the purchase decision assumes a great deal of importance in respect of location and area of the flat. The title deeds should be free from encumbrance.

5. Extent of information

Once the consumer recognizes the need, he then engages in a search process. Search means acquisition of information from the environment. The extent of information search is part of purchase importance. When the purchase is important, information is sought from all possible sources. But in the case of routine purchase of products and services, information search will be rather minimum.

Market Positioning refers to the ability to influence consumer perception regarding a brand or product relative to competitors. The objective of market positioning is to establish the image or identity of a brand or product so that consumers perceive it in a certain way.

For example:

A handbag maker may position itself as a luxury status symbol

A TV maker may position its TV as the most innovative and cutting-edge

A fast-food restaurant chain may position itself as the provider of cheap meals

Types of Positioning Strategies

There are several types of positioning strategies. A few examples are positioning by:

Product attributes and benefits: Associating your brand/product with certain characteristics or with certain beneficial value

Product price: Associating your brand/product with competitive pricing

Product quality: Associating your brand/product with high quality

Product use and application: Associating your brand/product with a specific use

Competitors: Making consumers think that your brand/product is better than that of your competitors

How to Create an Effective Market Positioning Strategy?

Create a positioning statement that will serve to identify your business and how you want the brand to be perceived by consumers.

For example, the positioning statement of Volvo: “For upscale American families, Volvo is the family automobile that offers maximum safety.”

1. Determine company uniqueness by comparing to competitors

Compare and contrast differences between your company and competitors to identify opportunities. Focus on your strengths and how they can exploit these opportunities.

2. Identify current market position

Identify your existing market position and how the new positioning will be beneficial in setting you apart from competitors.

3. Competitor positioning analysis

Identify the conditions of the marketplace and the amount of influence each competitor can have on each other.

4. Develop a positioning strategy

Through the preceding steps, you should achieve an understanding of what your company is, how your company is different from competitors, the conditions of the marketplace, opportunities in the marketplace, and how your company can position itself.

Importance of Positioning

Positioning involves both launching new brands into the marketplace (new brand positioning), and repositioning old brands. It is concerned with the differentiation of products and services and ensuring that they do not degenerate into a commodity. To maximize its potential a company should position itself in its core market segments, where it is objectively or subjectively differentiated in a positive way over competing offerings.

Positioning is particularly import for services in the market. As a result of competitive pressure the consumer is becoming increasingly confused by the huge offering of services within each market sector. These offering are communicated by a vast number of advertising messages promoting different features of the services. The key to a successful positioning strategy is to promote the feature which the company is best and which exactly matches the needs of the customer.

Because of intangibility and other features associated with services, consumers find that differentiation of services can be more difficult and complex. Successful positioning makes it easier for the customer to see a company‟s services as being different from others and exactly what is wanted.

Positioning is a strategic marketing tool which allows managers to determine what their position is now,

What they wish it to be and what actions are needed to attain it. The permits market opportunities to be identified, by considering positions which are not met by competitors‟ products. It therefore helps influence both product development and the redesign of existing products. It also allows consideration  of competitor‟s possible moves and response often considered at the product level although it is also relevant at the product sector and organizational level. Positioning involves giving the target market segment the reason for buying your services and thus underpins the whole marketing strategy. It also offers guidelines for development of a marketing mix with each element of he it being consistent with the positioning.

The division of consumables into services is a simplification: these are not discrete categories. Most business theorists see a continuum with pure service at one endpoint and pure tangible commodity goods at the other. Most products fall between these two extremes. For example, a restaurant provides a physical good (prepared food), but also provides services in the form of ambience, the setting and clearing of the table, etc. Although some utilities, such as electricity and communications service providers, exclusively provide services, other utilities deliver physical goods, such as water utilities. For public sector contracting purposes, electricity supply is defined among goods rather than services in the European Union, whereas under United States federal procurement regulations it is treated as a service.

Goods are normally structural and can be transferred in an instant while services are delivered over a period of time. Goods can be returned while a service once delivered cannot. Goods are not always tangible and may be virtual e.g. a book may be paper or electronic.

Marketing theory makes use of the service-goods continuum as an important concept which ‘enables marketers to see the relative goods/services composition of total products’.

In a narrower sense, service refers to quality of customer service: the measured appropriateness of assistance and support provided to a customer. This particular usage occurs frequently in retailing.

The goods and services continuum enables marketers to see the relative goods/services composition of total products. A product’s position on the continuum, in turn, enables marketers to spot opportunities. At the pure goods end of the continuum, goods that have no related services are positioned. At the pure services end are services that are not associated with physical products. Products that are a combination of goods and services fall between the two ends. For example, goods such as furnaces, which require accompanying services such as delivery and installation, are situated toward the pure goods end. Products that involve the sale of both goods and services, such as auto repair, are near the center. And products that are primarily services but rely on physical equipment, such as taxis, are located toward the pure services end.

A few observations of the Continuum model can be made:

• The offerings of a firm range from pure goods to pure services.
• Those that are mostly goods are tangible and are very easy to evaluate by the consumer (like fabrics, jewellery, a house etc.). A consumer finds it very difficult to evaluate those offers which are mostly services because of their intangibility (like legal and counselling advice, medical diagnosis etc).
• The range of offers has different qualities in themselves and the customer looks for or seeks these qualities:

Those that are mostly goods show search qualities. Customers know exactly what they want and look for those features in the offer. Thus, an apartment hunter would look for a 2­bedroom-hall-kitchen property in Bandra admeasuring 900 square feet in car.pet area. Or, a lady might look for specific designs in a 23-carat bangle from a Tanishq outlet. Mr. Joseph looks for worsted, blue woollen suit material for himself etc.

Thus a marketer can put the search quality features on prominent display and make it easier for customers to get details or access. If the customers do not find these features in their search they may become anxious and may not buy or they may go for rival products where there is easier access to information.

Those offers that are mostly services evince credence qualities There are no tangible features for the customer to search for. He then looks for credo qualities in the offer Reputation of the offer becomes the decisive factor. He has very few other alternatives to compare. Thus, Mrs. Manjrekar would choose only that lawyer to fight her divorce and custody battle who has a reputation for winning such court cases. A patient would. choose his doctor or surgeon on the basis of his reputation.

We tend to give our computers or for -repair on the basis of the reputation of the repairman. A marketer of such offers has to be doubly careful in highlighting the credibility of the service provider. An actor is never called again for a stage play if his histrionic talent is in question; a doctor or surgeons whose ethical reputation is in question right never have patients. Thus, in the product-service continuum’, services can be classified in three ways, under the range or degree of tangibility highly tangible to highly intangible. They are:

Highly tangible services:

They have high degree of tangibility. This is mainly because the services are rendered over certain goods, e.g., car rentals. It is a service based entirely on cars. If a place had no cars, such a service would cease to exist. For the marketer, it is both a boon and a curse. As mentioned, car rentals exist only because cars exist. It’s easy for the service marketer to be persuasive and “tangibles” the offer. He only has to include the car in his communication; the service concept could be easily comprehended by the consumer. In addition, if the car has a good brand image and is looking spick and, the car rental basks in the reflected glory. If the car rental mentions in its advertisements about the type of cars in its pool, the consumers perceive the quality of the company accordingly. Alternatively, if the car breaks down during a rental service, the consumer will have a poor impression and image of the car rental company. He would not reason that it was the car that broke down and failed and that the car rental company should really not be blamed.

Examples of car rental companies in India are Dial-a-Cab, in Delhi, and -Wheels-Rent-A­-Car (WRAC) of the Bhoruka group, who also own Transport Corporation of India, the giant fleet trucking enterprise. Other car rental companies are Hertz-Rent-A-Car and Avis in the United States.

Service linked to tangible goods: Here the service is linked to goods, either independently, or as part of the marketer’s offer. If it is the latter, the service becomes a part of the total product concept. This takes place when Videocon, the home appliance company, includes repair as part of its marketing mix. Even if it is not included, home appliance repair is a service that is forever linked to goods. If there were no home appliances in the world, such services would be non-existent. A whole range of services exists in the housing sector especially post-construction like repair and maintenance.

Highly intangible services: In this classification under the continuum model, service is highly intangible. The services cannot be touched, felt or seen, e.g., counselling, consultancy, psychotherapy, physiotherapy, a guest lecture, etc.

Marketing of products and services involves different strategies due to the dissimilarities in their characteristics. While in goods marketing, the aim is to fulfil the needs and wants of the target population.  As against, in service marketing, the firm seeks to create a good relationship with the customer, to win their trust.

The two most important activities undertaken by the business is production or procurement of products and its distribution to the end user. The procurement of raw materials and its conversion into a finished goods is an easy job. However, the disbursement of the goods is a strenuous one, because creating a place for a goods in the market is a bit difficult task, as the market is already flooded with lacs and lacs of products, where no one knows about your goods and in this way the marketing comes into the picture.

Nowadays, marketing is not confined to the product, but services, ideas, property, experiences and even people are marketed. The marketing activities are aimed at creating an impression of the goods or service in the consumer mind, in such a manner, that your brand becomes a synonym for that particular goods or service.

Goods Marketing

The entire process, right from the market analysis, to delivering goods to the customer and receiving feedback, is called goods marketing. The process is aimed at finding out the right market for its goods and its placement in such a way that it gets good customer response. It entails promotion and sale of a goods to its target audience, i.e. prospective and existing buyers.

Various activities involved in the goods marketing involves analysis of the market, identification of consumer demand, designing and development of product, pricing, pitching of a new product, communicating, advertising, positioning, distributing, selling, review and feedback.

Example: Marketing for tangible objects like books, handbags, laptops, mobiles, clothes and so on.

Service Marketing

When a person or business entity promotes services it offers to its customers or clients, it is known as service marketing. It is aimed at providing solutions to the problems or difficulties of the clients. It includes both business-to-business (B2B) and business-to-consumer (B2C) marketing.

A service is an act of performing something for someone in exchange for adequate consideration. It is intangible, consumed at the time of its production, can’t be inventoried and resold. Each service offering is unique in itself because it cannot be repeated exactly alike, even if the service is rendered by the same person.

Example: Marketing of professional services, beauty parlours or salon, spa, coaching centres, health services, telecommunication, etc.

1. The process in which the marketing activities are aligned to promote and sell a specific goods for a particular segment is called goods marketing. The marketing of economic activities, offered by the business to its clients for adequate consideration, is known as service marketing.
2. In a goods marketing, only 4 P’s of the marketing mix are applicable which are product, price, place and promotion, but in the case of service marketing, three more P’s are added to the conventional marketing mix, which are people, process and physical existence.
3. When a goods is marketed, the company offers value, as it fulfils customer’s requirements. Conversely, when service is marketed by a company, it offers a relationship to its clients.
4. One thing to be noted that, in goods marketing, the company promotes something whose ownership can be transferred/resold to another party. But in the case of service marketing, the company promotes something, whose ownership can neither be transferred nor it is resold to the other party.
5. In goods marketing, products reach the buyers, as they can be transported from one place to another through various distribution channels. Unlike service marketing, where customers come to the services or the service provider visit customer because services cannot be transported, they are location based.
6. Products are tangible in nature, they can be felt and touched, which make its promotion easier. On the other hand, services are intangible, people can only experience it, and so marketing of services is a bit difficult.
7. If the quality of a certain goods is not up to the mark, or it does not fulfil the desired requirement, it can be returned to the seller. However, it is impossible in the case of services, because once the services are delivered, they cannot be taken back. So, the marketing of services, should be done keeping the returnability factor in mind.
8. In goods marketing, the goods can be separated from its producer, and so they are durable and can be inventoried. On the contrary, in service marketing, services can not be separated from its source, i.e. service provider. Hence the production and consumption of services are simultaneous; they are perishable.
9. Goods offered by a company under a particular segment are standardised; they cannot be changed or altered as per customer’s requirement. In contrast, services offered by a company are highly variable and can be easily customised as per the requirements.
10. It is a human tendency, that we respond quickly, to what we see and it is a major pro, of goods marketing that it grabs our attention, and encourages sales. As against this, services can’t be seen it can only be experienced and so the response it a little slow, while marketing services.
11. In goods marketing, the quality of the goods can be measured by making a comparison between various products, but this is just opposite in service marketing, where the measurement of services is not possible.

Whether, it’s a goods marketing or a service marketing, the task is equally onerous. However, with the former, there are some advantages such as tangibility, separability, durability, transferability, etc. which the latter lacks, making it a bit difficult. Demonstration of goods or service is one of the best ways to promote it. Further, word of mouth also helps in marketing them.

The service marketing environment refers to all internal and external factors, which directly or indirectly influence the organization’s decisions related to marketing activities. Internal factors are within the control of an organization; whereas, external factors do not fall within its control. The external factors include government, technological, economic, social, and competitive forces; whereas, organization’s strengths, weaknesses, and competencies form the part of internal factors.

Marketers try to predict the changes, which might take place in future, by monitoring the marketing environment. These changes may create threats and opportunities for the business. With these changes, marketers continue to modify their strategies and plans.

Features of Marketing Environment

1. Specific and General Forces

It refers to different forces that affect the marketing environment. Specific forces include those forces, which directly affect the activities of the organization. Examples of specific forces are customers and investors. General forces are those forces, which indirectly affect the organization. Examples of general forces are social, political, legal, and technological factors.

2. Complexity

It implies that a marketing environment include number of factors, conditions, and influences. The interaction among all these elements makes the marketing environment complex in nature.

3. Vibrancy

Vibrancy implies the dynamic nature of the marketing environment. A large number of forces outline the marketing environment, which does not remain stable and changes over time. Marketers may have the ability to control some of the forces; however, they fail to control all the forces. However, understanding the vibrant nature of marketing environment may give an opportunity to marketers to gain edge over competitors.

4. Uncertainty

It implies that market forces are unpredictable in nature. Every marketer tries to predict market forces to make strategies and update their plans. It may be difficult to predict some of the changes, which occurs frequently. For example, customer tastes for clothes change frequently. Thus, fashion industry suffers a great uncertainty. The fashion may live for few days or may be years.

5. Relativity

It explains the reasons for differences in demand in different countries. The product demand of any particular industry, organization, or product may vary depending upon the country, region, or culture. For example, sarees are the traditional dress of women in India, thus, it is always in demand. However, in any other western country the demand of saree may be zero.

Types of Marketing Environment

The sale of an organization depends on its marketing activities, which in turn depends on the marketing environment. The marketing environment consists of forces that are beyond the control of an organization but influences its marketing activities. The marketing environment is dynamic in nature.

Therefore, an organization needs to keep itself updated to modify its marketing activities as per the requirement of the marketing environment. Any change in marketing environment brings threats and opportunities for the organization. An analysis of these changes is essential for the survival of the organization in the long run.

A marketing environment mostly comprises of the following types of environment:

• Micro Environment
• Macro Environment

The discussion of these environments are given below:

1. Micro Environment

Micro environment refers to the environment, which is closely linked to the organization, and directly affects organizational activities. It can be divided into supply side and demand side environment. Supply side environment includes the suppliers, marketing intermediaries, and competitors who offer raw materials or supply products. On the other hand, demand side environment includes customers who consume products.

Let us discuss the micro environment forces in the following points:

(i) Suppliers

It provides raw material to produce goods and services. Suppliers can influence the profit of an organization because the price of raw material determines the final price of the product. Organizations need to monitor suppliers on a regular basis to know the supply shortages and change in the price of inputs.

(ii) Marketing Intermediaries

It helps organizations in establishing a link with customers. They help in promoting, selling, and distributing products.

Marketing intermediaries include the following:

• Resellers: It purchases the products from the organizations and sell to the customers. Examples of resellers are wholesalers and retailers.
• Distribution Centers: It helps organizations to store the goods. A warehouse is an example of distribution center.
• Marketing Agencies: It promotes the organization’s products by making the customers aware about benefits of products. An advertising agency is an example of marketing agency.
• Financial Intermediaries: It provides finance for the business transactions. Examples of financial intermediaries are banks, credit organizations, and insurance organizations.

(iii) Customers

Customers buy the product of the organization for final consumption. The main goal of an organization is customer satisfaction. The organization undertakes the research and development activities to analyze the needs of customers and manufacture products according to those needs.

(iv) Competitors

It helps an organization to differentiate its product to maintain position in the market. Competition refers to a situation where various organizations offer similar products and try to gain market share by adopting different marketing strategies.

2. Macro Environment

Macro environment involves a set of environmental factors that is beyond the control of an organization. These factors influence the organizational activities to a significant extent. Macro environment is subject to constant change. The changes in macro environment bring opportunities and threats in an organization.

(i) Demographic Environment

Demographic environment is the scientific study of human population in terms of elements, such as age, gender, education, occupation, income, and location. It also includes the increasing role of women and technology. These elements are also called as demographic variables. Before marketing a product, a marketer collects the information to find the suitable market for the product.

Demographic environment is responsible for the variation in the tastes and preferences and buying patterns of individuals. The changes in demographic environment persuade an organization to modify marketing strategies to address the altering needs of customers.

(ii) Economic Environment

Economic environment affects the organization’s costs structure and customers’ purchasing power. The purchasing power of a customer depends on the current income, prices of the product, savings, and credit availability.

The factors economic environment is as follows:

• Inflation: It influences the customers’ demand for different products. For example, higher petrol prices lead to a fall in demand for cars.
• Interest Rates: It determines the borrowing activities of the organization. For example, increase in interest rates for loan may lead organizations to cut their important activities.
• Unemployment: It leads to a no income state, which affects the purchasing power of an individual.
• Customer Income: It regulates the buying behavior of a customer. The change in the customer’s income leads to changed spending patterns for the products, such as food and clothing.
• Monetary and Fiscal Policy: It affects all the organizations. The monetary policy stabilizes the economy by controlling the interest rates and money supply in an economy; whereas, fiscal policy regulates the government spending in various areas by collecting the revenue from the citizens by taxing their income.

(iii) Natural Environment

Natural environment consists of natural resources, which are needed as raw materials to manufacture products by the organization. The marketing activities affect these natural resources, such as depletion of ozone layer due to the use of chemicals. The corrosion of the natural environment is increasing day-by-day and is becoming a global problem.

(iv) Socio-Cultural Environment

Socio-cultural environment comprises forces, such as society’s basic values, attitudes, perception, and behavior. These forces help in determining that what type of products customers prefer, what influences the purchase attitude or decision, which brand they prefer, and at what time they buy the products. The socio-cultural environment explains the characteristics of the society in which the organization exists. The analysis of socio-cultural environment helps an organization in identifying the threats and opportunities in an organization.

For example, the lifestyles of people are changing day-by-day. Now, the women are perceived as an active earning member of the family. If all the members of a family are working then the family has less time to spend for shopping. This has led to the development of shopping malls and super markets, where individuals could get everything under one roof to save their time.

(v)  Technological Environment

Technology contributes to the economic growth of a country. It has become an indispensible part of our lives. Organizations that fail to track ongoing technological changes find it difficult to survive in today’s competitive environment.

Technology acts as a rapidly changing force, which creates new opportunities for the marketers to acquire the market share. Marketers with the help of technology can create and deliver products matching the life style of customers. Thus, marketers should observe the changing trends in technology.

Service economy can refer to one or both of two recent economic developments:

The increased importance of the service sector in industrialized economies. The current list of Fortune 500 companies contains more service companies and fewer manufacturers than in previous decades.

The relative importance of service in a product offering. The service economy in developing countries is mostly concentrated in financial services, hospitality, retail, health, human services, information technology and education. Products today have a higher service component than in previous decades. In the management literature this is referred to as the servitization of products or a product-service system. Virtually every product today has a service component to it.

Services include a wide range varying from education, transportation, hospitality, finance, real estates, accounting, banking, insurance, taxation, consultancy, health care etc. These services are together called the services sector or the tertiary sector.

Everything that grows also changes its structure and change is inevitable. A human being passes through different phases-infancy to old age and during which he constantly changes in terms of perception, attitude, physical and mental attributes etc.

Similarly a growing economy changes the proportions and interrelations among its basic sectors namely agriculture, industry, and services and between other sectors like rural and urban, public and private, domestic-and export-oriented etc. All growing economies are likely to go through these stages.

A service is a set of consumable and perishable benefits delivered by a service house to a customer to ensure customer satisfaction.

Goods and services are produced in every economy. In a crude way, a good is something one can take with him after purchase, whereas a service cannot be taken as it is intangible. Example when a person goes to a dentist he use the services of the dentist and returns with a relief. In the process he does not get any physical commodity but still he has consumed a service.

Core goods providers provide a significant service component as part of their businesses. For example, automobile manufacturers provide extensive spare parts distribution services to support repair centers at dealers. Core service providers must integrate tangible goods with intangible services.

For example, a cable television company must provide cable hookup, repair services and also high-definition cable boxes. Pure services, such as may be offered by a financial consulting firm, may need little in the way of facilitating goods, but what they do use such as textbooks, professional references, and spreadsheets are critical to their performance.

The recent services are the ones related to IT, BPO, KPO, BT etc. These sectors are growing phenomenally.

A commercial service is a type of economic activity that is intangible, cannot be stored and does not result in any ownership. A service is consumed at the point of sale itself. Services are one of the two key components of economics, the other one being goods.

Sometimes services are difficult to identify because they are closely associated with a good; such as the combination of a diagnosis with the administration of a medicine. No transfer of possession or ownership takes place when a service is sold.

The American Marketing Associations defines services as “(1) activities, benefits or satisfaction which are offered for sale, (2) are provided in connection with the sale of goods”. The services described in the second half of the definition are those included in the sale of goods to the customer, viz., pre-sale and after sale services, e.g., services on installation of machinery, its maintenance and repairs, credit and delivery services etc.

The first part of the said definition, viz., “activities, benefits or satisfactions which are offered for sale.” The marketing of these kinds of services usually does not include the sale of goods to the customer. Such activities, benefits or satisfactions offered for sale are intangible in nature, i.e., they are not concrete objects which can be seen, tasted, felt, moved and so on.

There is a regular market for such services represented by activities, benefits and satisfactions offered for sale by providers of services. These services may be labour services, personal services, professional services or institutional services such as offered by transport, banking, insurance, warehousing, advertising and such other services organisations.

When a customer buys a service in the service market be buys the time, knowledge, still or resources of someone else who is the provider or supplier of a service. The buyer receives satisfactions or benefits from the activities of the provider who be an individual, a firm or a company, i.e., and institution specialising in selling certain benefits or satisfaction.

The importance of service Sector in economy is growing rapidly.

• Services account for more than 60 percent of GDP worldwide
• Almost all economies have a substantial service sector
• Most of the new employment is provided by services (Fastest growth expected in knowledge-based industries)
• Strongest growth area for marketing