Challenges in Services Marketing

The very nature of services creates some marketing challenges 

Variable performance of service providers and
variable expectations of customers results makes mismatch possible
resulting into complaints and conflicts and dissatisfaction Being highly people dependent (rather than machine dependent) the service delivery is hard to standardize and on top of this (A) customer expectations and scripts are variable (being intangible) in terms of inspectable qualities (mostly functional) , experiential qualities (mostly servicescape related) and belief qualities (mostly emotional) (B) service provider expectations from the customers and scripts are variable. As a result of this, it is very difficult to ensure consistent satisfaction on both the sides of a  service encounter and hence potential for complaints in very high and most customers are emotionally upset over the fact that they paid upfront but things did not turn out to be as they seemed particularly in "experiential" areas. Complaint collection and resolution and recovery and escalation need to be thought of as integral part of the service design itself and channels for handling these cycles and frequent reviews are necessary. This is not only true for end customers but for first-customers also (i.e. employees). There is no point in "employee recovery". We must make sure that the disengaged employees are detected early and counseled and brought on track. The first line leaders are very important in service business. In fact good first line supervisors are worth their weight in gold.

Insecurity / risk perceived by potential clients
Because the services marketing is fraught with complaints, potential customers consider a new service source (company, outlet, person) a risk and hence word of mouth and referrals are very important in acquiring new customers . This is also the reason why customers are more loyal in services and barriers are high for new competitors. The direct contact with and insecurity of clients create opportunities for the necessary relation management.


Internal marketing The quality of the staff and their motivation and their cultural alignment makes a strong impact on the quality of service delivered to the customers.This in turn depends on the leadership focusing equally on treating the employees as the "1st market"
Actively managing customer encounters The mfg location, process, equipment, materials, people and overall impression created by these does not reach the customers in product business because the product is pre-created at few locations and then distributed to faraway customers. The value of products to the customers is embedded in the product that is in front of them. Since the services are co-created and since the customer is almost always a part of the service manufacturing process , the "insides" of the 

Capacity management
Services can not be stocked up like physical products, so unused capacity will alfaraway ways be lost. An accountant with nothing to do, or a hotel room that is not occupied, both are by definition not productive. On the other hand, the capacity can fall short when the question for a service shows unexpected peaks. These events could (and perhaps should) lead to the development of capacity management.

Three tasks

The core problems mentioned above are usually dealt with through a combination of three marketing tasks: external, internal and interactive marketing.

• External marketing means ‘making the promise’,
• Internal marketing means ‘making the promise possible’, and
• Interactive marketing means ‘fulfilling the promise that was made’.

Services are a prerequisite to convert products into solutions and to differentiate them from the competition. Therefore in most industries, providing a service is no longer an option but a necessity.
Products today have a higher service component than in previous decades.

The old dichotomy between products and service has been replaced by the service-product continuum. Many products are being transformed into services. For example,IBM treats its business as a service business and it sold off its traditional hardware business. It sees the physical goods as a small part of the"business solutions" industry. They have found that the price elasticity of demand for "business solutions" is much less than for hardware. There has been a corresponding shift to a subscription pricing model. Rather than  receiving a single payment for a piece of manufactured equipment, many manufacturers are now receiving a steady stream of revenue for ongoing contracts. 

Technical words in service are service encounters, service quality, service theater, service experience, servicescapes, and service recovery.

Service orientation of their staff is a big business.

Service Market SegmentationAttributes of Effective Segmentation :

1. Identifiable
2. Accessible
3. Sizeable
4. Profitable
5. Unique needs
6. Durable
7. Measurable
8. Compatible

 Reasons for marketing Segmentation:

1. Facilitating proper choice of target markets
2. Higher Profits
3. Facilitates tapping of the market, adapting the offer to the market
4. Stimulating Innovation
5. Makes the marketing effort more efficient and economic.
6. Benefits the customer as well
7. Sustainable customer relationship in all phases of the customer life cycle
8. Targeted communication
9. Higher market share