Trends in marketing services - Marketing of Library and Information Services

Library Trends, Wntr, 1995 by Linda M. Gorchels

ABSTRACT

Service marketing differs from product marketing due to the fact that services are intangible and typically require personal interaction with the customer. Yet an understanding of this type of marketing is important since service jobs generate 74 percent of gross domestic product. Even though many of the tactics of product marketing (e.g., advertising) require only minor adaptation to be applied to services, the role of interpersonal relationships distinguishes service and product marketing in strategic vision and organizational considerations.

This article explores some of the trends in service marketing as they relate to strategic vision, operational and organizational changes, and marketing tactics. In terms of strategic vision, examples are provided of companies that have successfully redefined their businesses as broader systems of services built on competitive core competencies. It then goes on to describe the need for a market-driven culture, the use of training and incentives in making the transition, the role of product management in enabling a crossfunctional perspective necessary for quality service to become a reality, and the significance of "mood" or climate. Finally, it presents comments on new service development, segmentation, database marketing, channels, and advertising as these relate to marketing in the service sector.

INTRODUCTION

Marketing, as the term is commonly understood today, developed initially in connection with the selling of consumer packaged goods and later with the selling of industrial goods. Yet one of the major megatrends in America has been the phenomenal growth of services. Service jobs generate 74 percent of gross domestic product and 79 percent of all jobs. In fact, the Bureau of Labor Statistics expects service professions to account for any net job growth through 2005 (Henkoff, 1994, p. 49). These jobs go beyond what is characteristically considered the low-paid service position to include professionals in a variety of fields including medical, financial, telecommunications, and information services.

There are many perceptions of what "service" is, and it may be useful to differentiate between services which are salable products per se and those customer services which are tangential to the product (such as empathy, a friendly attitude, and superior customer treatment). Corporations provide a range of offerings along a continuum from pure services to pure products with very few things at either extreme. Customer service activities are a critical and inseparable part of doing business for any offering along the continuum. However, the farther an offering is on the service side of the continuum, the more important the human relationship between the provider and consumer of the service becomes. Since service sector products are intangible, the buyer uses satisfaction with customer service treatment as an indicator of the quality of the core service purchased.

The book by Berry, Bennett, and Brown (1989), Service Quality, describes how important the service process is to the customer's perception of quality:

The way customers judge a service may depend as much or even

more on the service process than on the service outcome. In

services, the "how" of service delivery is a key part of the service.

Purchasers of tangible products judge quality on the basis of

the finished product - its durability, functioning, appearance,

and so on. Purchasers of services judge quality on the basis of

experiences they have during the service process as well as what

might occur afterwards. (p. 34)

Due to the importance of the relationship between the service provider and consumer, quality customer service is increasingly being viewed as a key subset of service marketing. Even though many of the tactics of product marketing (e.g., advertising) require only minor adaptation to be applied to services, the role of interpersonal relationships distinguishes service and product marketing in strategic vision and organizational considerations. These are discussed later.

STRATEGIC TRENDS

Levitt (1960), in his article "Marketing Myopia," wrote that the railroad industry foundered because it considered itself in the railroad business rather than in the transportation business. This fundamental shift in business definition would have dictated a very different approach to planning and growth.

Services are faced with the same challenge to redefine their businesses as broader systems of services built on competitive core competencies. Progressive Corporation is an example of an organization that has redefined its business from a company that sells automobile insurance to a "mediator of human trauma" (Henkoff, 1994, p. 49). Its CAT (catastrophe) team flies to the scene of major accidents, provides support, and handles claims quickly. Contact is made with 80 percent of accident victims within nine hours after learning of the crash. To be able to provide support effectively, Progressive pays for training its agents not only in insurance matters but also in grief counseling (since part of the job involves dealing with the relatives of accident victims). This approach has earned Progressive one of the highest margins in the property and casualty insurance industry, which has notoriously low margins.