We can now look more closely at how the marketing mix may be applied to service products. We shall look first at our conventional 4P’s of marketing and then at more additional mix elements in service marketing.
The Service Product
The “product” element of the marketing mix for service products requires that decisions be made on the following:
- The type and range of services.
- The quality and attributes of the services.
- Warranties, after-sale facilities, etc.
As regards product life cycle management and new product development, all the tools and concepts of physical-product marketing apply, although, given the intangible nature of services, concept testing of new ideas for services takes on particular significance and can be extremely difficult to conduct.
Pricing of Services
Again the basic methods of price determination and alternative pricing strategies, such as market skimming versus market penetration, apply equally to services.
It should be noted that the perishability of services means that the careful matching of demand and supply is crucial. Because of this, we should expect to find that a much more flexible approach to pricing and margins is appropriate for services. Equally note that the intangible nature of service products also tends to heighten the use by customers of price as an indicator of quality.
Place and Services
Remember that the perishable nature of service products stems from the fact that they cannot be stored. This means that with one or two exceptions, physical distribution is not a key problem. As regards channels, we have also noted that inseparability demands’ that many services are sold direct by producer to consumer. However, some type of agent or broker is often used to market financial or travel services, for example, and increasingly franchising has become an important method of widening the distribution and market spread of many types of service, particularly in the fast-food market.
Once again we find that the intangible nature of service products raises special consideration for their marketing. The marketer of service products needs to stress the benefits rather than the features of his’ service. So, for example, a college needs to promote, say, the job prospects for its graduates as much as the details of the courses it offers.
Personal selling is particularly important in the promotional mix for services. Often the customer is purchasing the personal qualities and skills of the service provider, so that an ability to develop close relationships and win customer confidence is crucial.