The Concept of Service Marketing

RossHelen/iStock/GettyImages

If your business sells intangible services, it’s important to become familiar with the nuances of service marketing. While the foundations of marketing products also carry over to the business of marketing services, there are some differences and distinctions of which you need to be aware. Understanding how services differ from products can help your business to stand out in a competitive market by focusing on the benefits you offer your target audience.

Differentiating Between Products and Services

Products and services are often lumped together into one offerings category. However, it’s important to understand the characteristics that make them different. Knowing this enables businesses to better market their services and differentiate themselves from others on the market. Characteristics of services include:

  • Intangibility: This is one of the most important features of a service. Unlike a tangible product, a service is not something consumers can hold in their hand. For many businesses, the intangibility of the services makes it difficult to market and requires them to attach tangible features to their service. For example, a massage business may add a free bottle of lotion with every massage sold to increase the tangibility of its offer.

  • Variability: Services are difficult to replicate exactly the same every time around, unlike products. A T-shirt can be manufactured with exact specifications, but a haircut, for example, cannot be the same every time. There are always variances to services. This can pose a challenge to businesses because they may not be able to offer consistency in their services every time.

  • Perishability: A service is consumed as soon as it is produced, unlike a product that can be saved for a time before use. For example, an oil change from a mechanic is consumed while he is performing it, unlike a burger that can be bought and consumed hours after it was produced. This perishability creates challenges for marketers because the production and consumption are inseparable.

Products are physical, tangible items that a consumer can touch, see, taste, hear or smell. They can be transferred from one consumer to another. For example, a person can purchase a handbag and then resell it to another consumer after using it. A service, on the other hand, cannot go through this process because it’s consumed as soon as it is created.

Looking at Two Kinds of Services

There are two ways to offer services to your customers:

  1. Core service: This is the main offering of your business. It is the reason for the financial transaction between the consumer and the business. For example, a landscaping business offers a lawn mowing service. The sole purpose of the offering is the service of mowing the customer’s lawn.

  2. Secondary service: This kind of offering happens as a result of the sale of a tangible product, and it is not the sole purpose of the transaction. For example, a furniture store that sells different kinds of couches, tables and chairs can offer a home-delivery and furniture-building service. That service is only purchased if the customer buys furniture from the store in the first place. That service cannot be bought on its own because it is connected to the product.

When figuring out your service marketing strategy, it’s critical to understand what kind of services you offer. Are your offerings core services that are the main reason for any financial transactions for your business? Are your offerings secondary services that only happen as a result of a tangible product? Knowing the difference can help you to create a marketing plan that focuses on the benefits of each kind of service.

Understanding the Service Marketing Concept

How does service marketing differ from product marketing? The classification of service marketing includes incorporating the three characteristics of services into the marketing strategy: intangibility, variability and perishability.

While these three characteristics can pose challenges to businesses, they can also be leveraged as opportunities. This is why it’s important to understand what constitutes a service and what makes it different from a product. Understanding the nuances can help businesses to use the differences as benefits for their consumers. The service marketing concept includes:

  • Turning intangibility into relationship building: With products, customers have the ability to physically see what they are buying, but this isn’t always the case with intangible services. This makes it difficult for the customers to trust the service provider. As a result, it’s critical for the business to focus on building relationships with prospects in order to gain trust and establish credibility. That way, even if the consumers don't physically see the service, they still feel they are getting value for their money.

  • Turning variability into a unique value proposition: Businesses can copy a product from a competitor, but it’s almost impossible to copy a service exactly. That’s because services by nature vary from business to business. As a result, companies that sell services can use this variability to their advantage and promote the differences in their offerings. For example, a dog groomer can market her unique experience with certain breeds of dogs, setting herself apart from other dog groomers in the area.

  • Turning perishability into loyalty: Services are consumed at the same time they are produced. Businesses can use this characteristic to offer customization for the services, involving the consumers in the production aspect of the service and giving them more control over what they purchase. This can then turn those customers into loyal, repeat customers because they know that they can get exactly what they want from the business.

If service businesses want to stand out in their competitive markets, it’s vital to use the three main characteristics of services and turn them into advantages. By seizing these opportunities, service businesses can create a memorable brand experience and build a following of customers.

Reviewing the Foundations of Marketing

The foundation of marketing any product or service is the marketing mix, also known as the four P's of marketing. This is what every business uses to create offerings and messaging that appeal to their target market.

Before working on the marketing mix, it’s vital to narrow down your target market so you have a clear idea of to whom you are selling. Segment your consumer base by demographic, geographic, behavioral and psychographic categories to ascertain what they want, need, like and dislike. It’s important to understand the main challenges your consumer are facing and how you can help them with the services your business offers.

Once you have an understanding of your target market, apply the marketing mix to develop your go-to-market plan:

  1. Product: This first P also applies to intangible services as well. In this first step, it’s vital to understand how your services can help your customers solve their problems. For example, if your prospects are short on time and looking to have someone clean their home, can you offer house-cleaning packages? Do your prospects have a dog but don’t have time to walk it? Your business can offer a dog-walking service.

  2. Price: The price for your service is based on the value you provide to your customers. How much do they need your service, and what are they willing to pay for it? Does another business offer a similar service? It’s vital to research competitive pricing since you don’t want to price too high or too low without a key differentiator for your service.

  3. Place: Where can your customers purchase your service? Do they need to come to your business, or will you go to their home to perform the service? Can they buy your service online and have it produced elsewhere? Remember to make the purchasing of the service as convenient for the consumer as possible.

  4. Promotion: How will you communicate the benefits of your service to your target market? Use a combination of advertising, personal selling, direct marketing, sales promotions and public relations to target your audience. Be sure to clearly discuss the benefits that make your service unique. Focus on the intangibility, variability and perishability and use those traits to your advantage.

Adding Three Additional Foundational Components

In addition to the four P's of marketing, service marketing includes three additional P's based on its unique characteristics. The additional foundational components to service marketing are:

  1. People: Relationships are an integral component to services because they are closely tied together. The person providing the service is part of the service itself. It’s critical for businesses to ensure that their employees work on their customer service skills when selling services because customers will remember their interactions at your business.

  2. Process: While customization is an important part of service delivery, it’s also crucial for businesses to have a tried, tested and true process on which they can rely to ensure that the quality of their service is always paramount. Focus on what kind of quality your target market wants and build a process that helps your employees offer that same quality to their customers every time.

  3. Physical evidence: Services are always intangible, so it can be difficult for consumers to understand specifically what they are buying. Focus on your target market’s interests, likes and dislikes and offer a complete experience with your intangible service. Create a welcoming waiting room for your hair salon or offer free coffee while customers wait for their oil change. These physical reminders of the value you offer can go a long way.

Advantages of Service Marketing

When done correctly, service marketing offers businesses many benefits. Primarily, superior services can bring the business positive reviews, testimonials and word-of-mouth referrals. This is one of the best features of service marketing.

Prospects trust the experiences of other customers just like them. Having glowing reviews can bring a service-based business more customers and can increase revenue. Businesses can share these reviews on their website or in their other marketing materials to showcase how well they are liked by their customers.

Another key advantage to service marketing is that it helps to create recurring sales. Reminding customers of the positive experience they had with you on a regular basis can entice them to come back to purchase another service from your business. Research the interval your customers require your service and target them to get reoccurring sales. For example, a dentist’s office may email its customer base every six months to remind them to book another cleaning appointment.

Applying Service Marketing Strategies to Your Business

Once you’ve established the seven P's of service marketing, it’s time to apply service marketing strategies and best practices in your business. Consider these examples of service marketing strategies:

  • Focusing on value, not price: Discuss the value of your service to your target market. Do they value saving time? Focus your marketing on how you can save them four extra hours a month, for example.

  • Staying in touch with consumers: Service marketing relies heavily on relationships. Keep in contact with your client base through your email newsletters, social media or text message campaigns to remind them that you value their business.

  • Making a name in your community: Become an integral and respected business in your community by partnering with other businesses and joining local business and commerce groups. This kind of networking can bring in new business and establish credibility.