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Marketing Services

Marketing Services

When we think of marketing, we often imagine the process of advertising tangible goods like clothing, electronics, and other fast-moving consumer goods. However, many businesses around the world market services. In fact, the service industry has grown remarkably over the past decade and has become the largest sector of most developed nations' economies.1 So, how does marketing services differ from marketing tangible goods? Read along to find out!

Meaning of Marketing Services

Marketing services, or services marketing, is concerned with all the activities behind selling services. It is vital to distinguish between tangible products and services as their characteristics differ (see Figure 1 below). We can differentiate services from physical goods based on their:

  1. Intangibility - you cannot touch, feel, hear, see, smell, or taste a service before you purchase it.

  2. Inseparability - services cannot be separated from the service provider.

  3. Variability - service quality may vary based on who is providing the service.

  4. Perishability - services cannot be stored for future use.

A service is an intangible, inseparable, variable, and perishable product.

However, it is essential to note that a product does not necessarily have to be a pure service to be involved in service marketing.

Check out our Product explanation to learn more about the differences between pure services and pure tangible goods.

Many companies that produce tangible goods can also take part in service marketing. This idea is known as servitization.

Servitisation includes attaching services to a tangible good to stand out from competitors and offer higher value to customers.

For instance, instead of offering a pure physical good, a company can provide pre-sales services like consultation and after-sales services like repairing or monitoring the product, thus providing higher value to customers.

Types of Marketing Services

Now that we understand service characteristics, let's look at the types of marketing services. There are three crucial factors marketers must pay attention to when marketing services: quality, differentiation, and productivity.

Marketing services: Service quality

Service quality plays a huge role in marketing services. Although the concept of service quality is subjective - based on customer perceptions and experiences - there are five key dimensions marketers can use to examine the quality of service. Collectively, these five dimensions are known as the RATER Model (see Figure 2 below). They are as follows:

  1. Reliability: can the organization perform the service accurately and consistently?

  2. Assurance: are the employees delivering the service knowledgable and communicative? Can customers trust what the employee is saying?

  3. Tangibles: are physical facilities (where the service is delivered) appealing? Do employees seem reliable? Does the company website seem trustworthy?

  4. Empathy: do employees give customers enough individual attention? How do employees react to customers?

  5. Responsiveness: is the organization willing to provide service? How responsive is the organization in helping customers? How quickly is the service delivered?

Maintaining high-quality service is vital for organizations as it can be a source of competitive advantage. When a company is known for its high-quality service, it differentiates itself from competitors; thus, customers may be more willing to opt for a firm where high-quality service is guaranteed. Service quality is crucial for firms offering undifferentiated or highly similar products.

However, to offer high-quality service, firms must first understand the types of services customers value. Of course, this may differ based on industry or product type. For example, offering outstanding after-sales services for a product that barely requires after-sales services will not create additional value for customers.

For example, customers will value after-sales services when purchasing software more than when purchasing office chairs.

Marketing services: Service differentiation

It can be challenging to think of ways to differentiate services on attributes other than price. This is why service providers try to develop unique and innovative features to attract customers.

In 1992, Mary Jo Bitner explored the idea of servicescape, which suggests a connection between the psychical atmosphere of where the service is provided and the perception of service quality. The psychical atmosphere (place) may also impact how employees deliver the service.2

Servicescape is a framework that suggests the relationship between physical atmosphere and perception of service.

Companies can differentiate their offering by providing unique experiences to customers. Examples may include in-store experiences such as using virtual reality (VR) to try on a product, presenting customers with unique showrooms, or teaching customers how to use a product in person.

For example, Ulta Beauty, a makeup, hair, and skincare retailer, offers customers a variety of in-store experiences like hair salons, brow bars, and skin treatments. The company's goal is to become more than just a shop where people go to buy makeup. Instead, Ulta aims to create a spa-like environment where customers come to spend time and hang out with their friends. By offering these added experiences, the company differentiates itself from competitors that offer similar products.3

Marketing services: Service productivity

The final aspect marketers need to pay attention to when marketing services is service productivity. To increase service productivity, companies can:

  • Hire more employees,

  • Train and develop existing employees,

  • Sacrifice quality for quantity of service provided,

  • Adopt and/or develop new technologies.

However, it is also important to remember that there is a thin line between increasing overall productivity and sacrificing quality in the service sector. For a company that provides services, its service team is a foundation for its success. As a result, overworking frontline employees and cutting costs to increase productivity rarely leads to positive outcomes in the long run. In the next section, we will examine the role of service employees in more detail.

Professional Services Marketing

Let's now look at the role of service professionals in services marketing. In the service industry, having a professional service team responding to customers effectively is essential.

Frontline staff are the individuals who work in customer service teams and have direct contact with customers every day.

Frontline staff connects the organization to the outside world; therefore, their role includes:

  • Connecting with customers,

  • Welcoming and leaving a good impression on customers,

  • Introducing the product, brand, or service to customers,

  • Responding to customer queries and resolving issues,

  • Executing operational and administrative activities,

  • Selling the product to customers.

However, customer service employees can encounter various issues during their roles. As their role includes responding to customer demands, it can often cause a conflict between following organizational procedures and satisfying the customer's needs. Similarly, if organizational procedures go against the employee's personality or values, the employee still needs to maintain a level of professionalism when dealing with such cases.

As a result, companies need to pay significant attention to frontline staff as they are an essential source of customer loyalty and brand equity. For customers, the frontline staff is often the first and only human touchpoint customers encounter during their purchase journey.

Check out our Buyer Decision Process explanation to learn more about the purchase journey.

Therefore, these interactions are of utmost importance for developing a competitive advantage for the company.

Emotional labor is the idea that service employees must express favorable emotions during all service transactions. For example, even if the service employee is having a terrible day or feels undervalued in their job, they must stay customer-centric and respond positively to all customer questions and queries. This process can be highly stressful, and organizations should take action where possible to reduce such pressures on service employees.

Positioning Strategies in Service Marketing

When it comes to the service industry, marketers have to position their products effectively. However, positioning strategies may differ slightly from those of pure tangible goods. As you might already know, differentiation and positioning based on product features and characteristics are not as effective in the service industry.

Service firms often try to engage customers in different ways through their marketing communications. For example, they might use storytelling strategies to position their services in the market. As a result, they engage customers on various levels and provide experiences for customers to associate with the brand or company. Due to such experiences, customers may understand the practical and logical benefits of the product, in addition to the emotional appeal of the product.

Through service differentiation, service providers can position themselves as companies that provide higher value than competitors.

Marketing Services Examples

Before you head off, let's take a look at some examples of marketing services:

Fashion retailer ASOS takes an innovative approach to customer service. Rather than using direct customer service methods, like operating a phone line or an e-mail system, customers can find FAQs on the website or chat with a live agent. This method is effective as rather than holding the phone line for hours or waiting for days for an e-mail response, customers chat with a member of the team within minutes. Although this might be a practical means of communication, it may not be as effective as speaking to someone on the phone when a complex issue needs resolution. Additionally, some customers might prefer to talk to the customer service team in person, and older customers may not feel comfortable using live chat.

On the other hand, financial service provider Santander takes a different approach to customer service.

When customers have questions or queries, they can find numerous ways of contacting their bank, Santander. First of all, there is a phone line customers can use to contact the bank throughout working hours. Second, customers can visit their branches to talk to customer service representatives in person. Additionally, the company's website is equipped with many FAQs and a live chat function for customers searching for immediate answers. As Santander is a financial service provider, it provides customers with numerous contact channels. The availability of channels helps customers find a service representative quickly and thus contributes to customer retention.

Marketing Services - Key takeaways

  • A service is an intangible, inseparable, variable, and perishable product.
  • Servicescape is a framework that suggests the relationship between physical atmosphere and perception of service.
  • Marketers can use five critical dimensions to examine service quality: reliability, assurance, tangibles, empathy, and responsiveness (RATER model).
  • Marketers can differentiate their offerings by providing unique experiences to customers.
  • Frontline staff are the individuals who work in customer service teams and have direct contact with customers every day.
  • Companies need to pay significant attention to frontline staff as they are an essential source of customer loyalty.

References

  1. Statista. Services. https://www.statista.com/markets/406/services/
  2. Bitner, Mary Jo. Servicescapes: The impact of physical surroundings on customers and employees. Journal of marketing. 1992.
  3. Nikki Gilliland. Seven innovators of the in-store customer experience. 2019. https://econsultancy.com/in-store-customer-experience/

Frequently Asked Questions about Marketing Services

Marketing services, or services marketing, is concerned with all the activities behind selling services. It is vital to distinguish between tangible products and services as their characteristics differ. 

Pure services can be distinguished from pure tangible goods based on four characteristics. As opposed to tangible goods, services are intangible, inseparable, variable, and perishable. 

An example of marketing services, or service marketing, can be observed through many companies operating in the service sector including financial, consultancy, or healthcare services. 

Marketing services provide a variety of tools. However, to offer high-quality service, firms must first understand the types of services customers value. Of course, this may differ based on industry or product type.

A digital marketing service is a type of service provider that provides digital tools for businesses. A digital marketing service agency may help an organisation generate leads, create targeted ads, or assess digital analytics. 

Final Marketing Services Quiz

Question

We can differentiate services from physical goods based on their:


  • Intangibility 
  • _________
  • Variability 
  • _________

Show answer

Answer

  • Intangibility
  • Inseparability
  • Variability
  • Perishability

Show question

Question

Services cannot be separated from the service provider.

Show answer

Answer

True

Show question

Question

Service quality is always the same no matter who is providing the service.

Show answer

Answer

False

Show question

Question

A product does not necessarily have to be a pure service to be involved in service marketing.

Show answer

Answer

True

Show question

Question

__________ includes attaching services to a tangible good to stand out from competitors and offer higher value to customers.

Show answer

Answer

Servitisation

Show question

Question

Although the concept of service quality is _________ - based on customer perceptions and experiences - there are five key dimensions marketers can use to examine the quality of service. 

Show answer

Answer

subjective

Show question

Question

What are the five dimensions of the RATER model?

Show answer

Answer

Reliability, assurance, tangibles, empathy, and responsiveness.

Show question

Question

"Do employees give customers enough individual attention? How do employees react to customers?" are questions related to the ________ aspect of the RATER model.

Show answer

Answer

empathy

Show question

Question

"Are the employees delivering the service knowledgable and communicative? Can customers trust what the employee is saying?"are questions related to the ________ aspect of the RATER model.

Show answer

Answer

assurance

Show question

Question

Maintaining high-quality service is vital for organisations as it can be a source of ____________. 

Show answer

Answer

competitive advantage

Show question

Question

__________ is a framework that suggests the relationship between physical atmosphere and perception of service. 

Show answer

Answer

Servicescape

Show question

Question

_________ suggests a connection between the psychical atmosphere of where the service is provided and the perception of service quality. 

Show answer

Answer

servicescape

Show question

Question

What can companies do to increase service productivity?

Show answer

Answer

  • Hire more employees, 

  • Train and develop existing employees, 

  • Sacrifice quality for quantity of service provided, 

  • Adopt and/or develop new technologies.

Show question

Question

__________ are the individuals who work in customer service teams and have direct contact with customers every day.

Show answer

Answer

Frontline staff

Show question

Question

As a result, companies need to pay significant attention to frontline staff as they are an essential source of _________. 

Show answer

Answer

customer loyalty

Show question

Question

_________ is the idea that service employees must express favourable emotions during all service transactions. 

Show answer

Answer

Emotional labour

Show question

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