Differences between services marketing and product marketing

In the last century the worlds economy has been transformed from a largely agricultural based economy to an industrial based one and now in the more developed countries the service based economy is dominant. However despite this growth in services, the marketing of services still struggles for attention and recognition in a field where for the majority the product is king. Amazingly many services are still being marketed as if they are a product despite the fact that 1"the problems encountered in services marketing are not identical to those encountered in goods arketing".A service can be defined as 2"any act or performance that one party can offer to another that is essentially intangible and does not result in the ownership of anything.

Its production may or may not be tied to a physical product". This in comparison to a product which can be defined as 3"when companies address needs by putting forth a value proposition, a set of benefits they offer to customers to satisfy their needs. The intangible value proposition is made physical by an offering, which can be a ombination of products, services, information and experiences".So services marketing differs from product marketing and the reason for this is that services have four major characteristics that greatly affect the design of marketing programs: intangibility, inseparability, variability and perishability. 4"Unlike physical products, services cannot be seen, tasted, felt, heard or smelled before they are bought". This represents a problem for the service marketer in that he or she must convince consumers about the advantages of a service, something which is much arder to achieve when the consumer cannot see, taste, feel, hear or smell the service being offered.

"Overcoming this can be achieved by making a service more palpable by creating a tangible representation of it. This is what occurred with the development of the bank credit card. By representing the service with a specially encoded plastic card that when used triggers the service, Visa and others have been able to overcome many of the handicaps normally associated with marketing an intangible". Another way in which services marketing differs from product marketing is through nseparability in that services are produced and consumed at the same time whereas products are produced and consumed at a latter date.

Here 6"because services are produced and consumed at the same time (simultaneity) customers may not be able to adequately evaluate their services purchases until after they have received the service and committed payment. Further, because service providers and customers are so often in such close proximity to one another during the production/consumption process, their interaction and the nature of their relationship takes on an added lement of importance". Tools used in product marketing become ineffective when used in services marketing.Gary Knisely realised this with the U. S.

Postal Service. He found that 7"in package goods marketing, the marketing management group doesn't have anything to do with managing checkout clerks. When marketing people went to the Postal Service, they set up marketing management that wasn't focused enough on that person at the counter. And the backlash was enormous". Services are also variable as the level of service a customer receives from the service rovider varies depending on who provides it, when it is provided and where it is provided.

Customers may receive good service from a company one day but on another occasion may receive inadequate service from the same company. 8"Because employee performance is likely to vary from unit to unit, from employee to employee, and even from minute to minute for the same employee, managing quality in a service business means managing human behaviour. Training, standards, motivation and management by example are helpful". Services marketing may also counteract variability by giving employees an incentive to help retain existing customers.The final characteristic of services marketing that make it differ from product marketing is perishability.

Whereas products can be stored and sold at a later date, a service cannot be stored, meaning that the service provider losses out on income and profits which can never be regained. For the services marketer 9"one of the crucial challenges is to find ways to better synchronize supply and demand as an alternative o recurring conditions of severe overdemand and underdemand". It is not just in relation to variability, intangibility, perishability and inseparability that services marketing differs from product marketing.When dealing with goods, product marketers use the traditional four P's of place, promotion, price and product. While this works well for goods, for services marketing the four P's alone will not suffice so we also use the three additional P's of people, physical evidence and process.

So what are the three additional P's and why do service marketers need them? The first additional P that service marketing needs is people who 10"are all human actors who play a part in service delivery and thus influence the buyers perceptions.This service provider or contact person can be very important and these providers may be the focal point of service encounters that can prove critical for the organisation". Physical evidence concerns itself with 11"the environment in which the service ids delivered and where the firm and customer interact. Physical evidence cues provide excellent pportunities for the firm to send consistent and strong messages regarding the organisations purpose, the intended market segments, and the nature of the service.

The final additional P which services marketers need over products is process which 12"involves the actual procedures, mechanisms, and flow of activities by which the service is delivered - the service delivery and operating systems". To someone using a service these three additional P's are very important as the quality of these P's can lead us to choosing one service over another while when purchasing a product, price ends to be the most important factor for someone deciding which product to buy.Services marketing and product marketing are different with the traditional product mix not working when it is applied to the services industry. Instead services marketing requires extra ingredients such as the three additional P's and innovative ways to solve the problems of intangibility, variability, perishability and inseparability. To overcome these problems services marketers must use more of their imagination than if they were marketing a product.