Archive for January, 2010
NATURE OF SERVICE
It is important to understand that services are different from products and this difference warrants a change in the way services are marketed. Services are intangible, perishable, inseparable from the provider, and highly variable each time it is delivered. These characteristics of service have to be thoroughly understood so that appropriate operations and marketing structures are created to be able to produce and sell services profitably.
INTANGIBILITY: Pure services cannot be seen, tasted or touched by customers before they are bought. Service is a deed, performance, or effort. Services are experiential by nature. A customer finds difficulty in evaluating a service before purchase, and yet quality has to be assessed before the act of purchase. It is impossible to judge how enjoyable a holiday will be before taking it. Patients cannot know for sure if they would be cured until they have been operated upon. For some offerings like getting a car serviced, the intangible nature leads to difficulty in evaluation even after consumption.
INSEPARABILITY: services involve simultaneous production and consumption. The service provider is an important part of the service and is an integral part of satisfaction gained by consumer. How service providers conduct themselves will have a crucial bearing on repeat business over and above the technical efficiency of the service task. In consumer’s eyes, the provider, like the insurance representative or the doctor, is the company. Selection, training and rewarding front line staff is of great importance in achievement of service quality.
VARIABILITY: Standardization is difficult in provision of services. Services are conducted at multiple locations by people who vary in their skills and attitudes and are subject to simultaneous production and consumption. A service fault, like rudeness cannot be quality checked and corrected between production and consumption, unlike a physical product. The potential for variability in service quality emphasizes the need for rigorous selection, training and rewarding of staff in service firms. Training should emphasize the standards of behavior expected of personnel when dealing with customers. Evaluation systems should be developed which allow customers to report their experiences with staff.
MANAGING SERVICES
The nature of services makes its marketing inseparable from its operations. The way service is produced has an indelible influence on its sale ability. Service facilities have to be managed in a way that promotes customer care when the customer is availing the service and also simultaneously improves the efficiency and effectiveness of service provision. Managing service quality, companies that are rated higher on service quality perform better in terms of market share growth. But high standards of service quality remain elusive. There is a big gap between the expectations of the customers and the level of the service they get.
It is important to understand why this gap persists in spite of the dominance of the service economy for some time now. This gap suggests that in spite of the best companies and people involved in the provision of services, the quality of services is nowhere as good as those of products. There are real barriers while matching expected and perceived service levels of customer’s, and these have to be overcome if customers have to feel delighted with the services they receive.
Misconception barriers arise when companies misunderstand customer expectations. Lack of market research leads mangers to misconceive the important service attributes that customers use when evaluating a service and the way in which customers use these attributes in evaluation. A restaurant manager may believe that shortening the gap between courses of meals may improve customer satisfaction, when the customer actually values gaps between courses while eating.
But there are genuine difficulties in understanding what customers actually want from the service encounter. Service attributes are not well defined and they are not standardized. A management eager to improve quality is able to do it. It has been seen that a company’s determination to improve the quality of its services is the most important factor in its quest to bridge the gap between customer expectations and actual service delivery. A determined company will find the right resources, equipment, and people to satisfy its customers.
POSITIONING SERVICES
Positioning is the process of establishing and keeping a distinctive place in the market for a company and its products. Service firms differentiate themselves from the competition on attributes that their target customers highly value. They develop service concepts that are highly valued. The service concepts are then communicated to target customers so that they accurately perceive the position of the service. The positioning task entails two decision: they are (I) choice of target market and (II) creation of differential advantage.
Creating a differential advantage is based on an understanding of the target customer’s requirements, and serving these requirements better than the competition. There is always an array of factors called choice criteria that customers use to judge a service. How well a service firm satisfies these criteria depends on its marketing mix. Asking customers about the most important factors when buying a service may give misleading results. The most important factor when traveling by air may be safety. But this does not mean that customers use safety as choice criteria when deciding which airline to use.
If all major airlines are perceived as being similar in terms of safety, other less important factors like quality of in-flight meals and service may be the crucial factors.
