Services marketing originated as a separate field of study during the 1980s. Researchers realized that the unique characteristics of services required different marketing strategies to those used in the promotion of physical goods. Services marketing is a specialized branch of marketing that promotes the intangible benefits delivered by a company to create customer value.
Understanding services marketing
Services marketing can be used in a broad and diverse range of contexts. The strategy can be used to promote medical care, spa treatments, rental vehicles, concerts, and dance lessons. However, it is perhaps most useful in the tourism industry since most tourism campaigns sell experiences and not products.
One of the most successful services marketing campaigns was the “What Happens Here, Stays Here” campaign created by the Las Vegas Convention and Visitors Authority. Launched in 2004, the campaign resulted in a record 37.3 million tourists visiting the city in the year following. The phrase itself associated the Vegas brand with adult freedom and the emotional connection between visitors and the city.
Services marketing characteristics
Broadly speaking, services marketing is exemplified by five characteristics:
- Intangibility – that is, the service being promoted cannot be seen or touched – only experienced. This means value is derived from the consumption of experience and cannot be transferred from one consumer to another. What’s more, value is difficult to evaluate prior to the consumer having the experience.
- Tangible product use – with the above in mind, it is important to note that many services marketing campaigns make use of tangible products to deliver customer value. Airline companies sell physical tickets to consumers which they associate with the experience of flying or traveling.
- Perishability – intangible services cannot be managed in the same way physical product inventories are managed. As a result, inventory cannot serve as a buffer between supply and demand and there is a high opportunity cost of idle capacity. For example, a portrait photographer relies on their technical expertise and rapport-building skills to make money. Conversely, a merchant selling portraiture lenses must maintain a physical inventory of said items.
- Low price sensitivity – in the service industry, consumers are less sensitive to price and more sensitive to the quality of the experience. An experience considered to have zero defects has the highest earning potential.
- Value creation – service companies can differentiate themselves in the market in three ways. Value can be created by offering a superior delivery process or level of customer service. It can also be created by the company developing a superior physical environment in which the service will be delivered.
The services marketing triangle
The services marketing triangle was developed in 2000 to depict the three essential elements of the service industry. Each point of the triangle emphasizes the division of tasks based on necessary skills, strategies, and priorities.
The three elements are:
- Internal marketing – where employees are assisted and trained to deliver or provide services to customers. Service delivery values are aligned with organizational values, and the best performers are duly rewarded.
- External marketing – where the organization markets to consumers through channels including social media, television, email, and other platforms.
- Interactive marketing – or the delivery of the service itself according to internal and external marketing messages. Successful delivery is typically associated with customer satisfaction, customer retention, and brand equity. Service delivery is defined by many service interactions, where the business either keeps or breaks the promises made in other marketing messages.
- Services marketing is a specialized branch of marketing that promotes the intangible benefits delivered by a company to create customer value.
- Services marketing is described by five characteristics: intangibility, tangible product use, perishability, low price sensitivity, and value creation.
- The services marketing triangle was developed in 2000 to depict the three essential elements of the service industry. Successful service delivery is defined by many service interactions, where the business keeps or breaks the promises made in its marketing campaigns.
Other Types Of Marketing
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