2.5.1 Strategic considerations for services
As we have already discovered, the marketing of services requires some additional discussion due to such characteristics as intangibility, perishability, heterogeneity and perishability. Table 2.4 points out some of the marketing problems inherent in services due to their characteristics and suggests strategies that can be used to overcome them.
In the next set of readings, Bateson (1995) proposes a number of basic competitive choices for services, namely:
- compete for market share
- compete for reach
- compete for geography.
Organisations competing for market share fall into two categories, they either remain place-bound in one geographic location or they are technologically free of place and often compete in a global market. These organisations can undertake a retention strategy or one of two growth strategies ¾ multi-service or multi-segment as shown in Figure 2.4.
Table 2.4 Problems and strategies in services marketingFeature |
Marketing problem |
Marketing strategy |
Intangibility |
Cannot easily be displayed or communicated Cannot be protected with patents |
Stress tangible cues Use personal sources Stimulate word-of-mouth Use post-purchase communication |
Customer involvement |
Customer involved in production Customer visits factory' (place of production) Service performance uses customer's time |
Focus on appearance of facility and employees Stress employee courtesy Use multisite locations Don't keep people waiting in lines |
Perishability |
Customer must be present Utility of value is short-lived Capacity is finite Time periods may be limited Cannot be inventoried |
Focus on convenience, saving time, fast service Extend hours Focus on competence and expertise Predict fluctuations in demand Manage capacity to balance supply and demand |
Product inseparable from producer |
Harder to mass-product produce Higher worker time, effort Quality hard to predict |
Stress care and quality of handmade values Need strong training programs, incentives Focus on personal attention |
Quality variability |
Standardization hard to achieve Hard to set up quality controls Can only predict quality or determine it after service is performed |
Stress standardization and performance consistency Focus on employee training programs, performance evaluation Consider licensing and other forms of credential requirements |
Source: Adapted from Zeithaml et al. (1985, pp. 33-46)
To compete for reach, organisations, although being place-bound, still serve many geographic markets because they rely on their customers being mobile and willing to travel to the particular service. Club Med resorts are an example of this type of service organisation. A multi-site strategy (Figure 2.4) is the growth strategy used by organisations competing for geography. This strategy involves replicating the same basic formula in multiple sites across geography and countries. Franchising is an example of a multi-site strategy.
Figure 2.4 Alternative growth strategies
Source: Bateson and Hoffman (1985, TM9.2)
Turn now to the following reading which includes Bateson's (1995) article focusing on generic competitive strategies, and an often referred to article by Zeithaml et al. (1985) in the services marketing literature concerning the problems facing service organisations and marketing strategies that can be used to overcome them. This article is considered a fundamental and breakthrough piece of research in services marketing.
Reading 2.3
Bateson, J. E. G. 1995, Managing Services Marketing. Text and Readings , 3 rd edn, Dryden Press, Fort Worth , Texas , pp. 395-405.
Reading 2.4
Zeithaml, V. A., Parasuraman, A. and Berry , L. L. 1985, 'Problems and strategies in services marketing', Journal of Marketing , 49 (Spring),
33-46.
Previous Page