Marketing questions

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3.4$When$the$Product$Is$a$Pure$Service

At$the$beginning$of$this$chapter,$Table$3.1$depicted$product$offerings$on$a$continuum$from$pure$goods,

like$soap$or$salt,$to$pure$services,$like$haircuts$or$hotel$stays.$While$some$things$offered$for$sale$fall$at$the

ends$of$this$continuum,$most$consumer$offerings$are$actually$a$mix$of$good$and$service.$A$restaurant

meal,$for$instance,$combines$food$(a$good)$and$the$work$of$a$kitchen$and$wait$staff$(a$service).

In$many$ways,$a$marketer's$product$strategy$for$a$service$is$no$different$from$that$for$a$tangible$product.

Just$like$goods,$services$have$to$deliver$customer$value.$As$consumers$we$expect$the$services$we$buy$to

deliver$reliability$and$Hitness$for$use$at$a$reasonable$price,$just$as$we$do$with$products.

The$three$perspectives$that$make$up$product$strategy$are$essentially$the$same$with$pure$services.

Marketers$describe$service$offerings$from$the$same$three$perspectives$of$core,$expanded,$and$concept.

Marketers$think$about$a$service$in$terms$of$how$it$Hills$a$need$(core$service),$how$it$is$differentiated$from

other$competing$options$and$establishes$its$value$(expanded$service),$and$the$company's$longKrange

strategy$surrounding$it$(service$concept).

The$fundamental$marketing$insight$of$serviceKdominant $logic—that $people$buy$what$they$buy$because

they$want$the$beneHits$that$derive$from$the$purchase—holds$true$with$services$as$well$as$products.

Looked$at$this$way,$there$is$no$difference;$both$are$simply$means$of$delivering$a$"solution$for$sale."

But$in$some$ways,$a$service$is$very$different$from$a$good.

How$Services$Differ$from$Goods

Services$don't$come$in$a$box—there's $nothing$new$to$take$home$after$purchasing$a$service.$That$fact

raises$a$number$of$issues$from$a$marketing$perspective.$Four$characteristics$of$services$set$them$apart

from$products.$Services$are:

1.$ Intangible,

2.$ Inseparable,

3.$ Variable,$and

4.$ Perishable.

Since$services$are$intangible,$it's$hard$for$buyers$to$"kick$the$tires"$before$they$buy.$Services$are$sold$on$a

promise$of$satisfaction$that$requires$more$faith$on$the$buyers'$part$than$purchase$of$a$good.$Therefore,

service$marketers$must$make$an$offering$tangible$through$clues$to$its$reliability$and$Hitness$for$use,$such

as$testimonials$from$satisHied$customers,$visual

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The$inherent$perishability$of$services$creates issues$for$businesses$facing$<luctuating$demand. Zipcar$("Wheels$when$you$want$them")$leverages perishability$to$differentiate$itself$from conventional$car$rental$companies.

ZUMA%Press/Corbis

representations$of$processes,$and$so$on.

Services$are$inseparable$from$the$individual$and$the

organization$that$provides$them.$Unlike$a$product$that

is$manufactured,$sold,$and$taken$home$in$a$box,$most

services$are$"manufactured"$by$a$seller$and$consumed

or$received$by$the$buyer$at$the$point$of$sale.$The$quality

of$the$interaction$between$service$provider$and

customer$is$an$essential$part$of$the$customer$value

equation.

Related$to$inseparability$is$variability.$Unlike$goods,

where$items$come$off$the$assembly$line$essentially

identical,$services$vary$with$the$person$providing$them.

If$every$day$you$order$a$Starbucks$latte$tall,$dry,$and

skinny,$you're$likely$to$come$to$believe$that$some

baristas$make$your$drink$better$than$others.$To$counter

the$variability$that$arises$from$inseparability,$companies$invest$in$extensive$staff$training$to$increase

consistency$of$service.

Services$are$perishable$because$they$typically$can't$be$stored$until$a$buyer$comes$along.$Suppose$you$are

a$photographer$with$an$appointment$for$a$family$portrait$at$3$p.m.$If$the$family$fails$to$show$up$for$the

sitting,$you$can't$sell$3$p.m.$to$another$client.$With$every$elapsing$minute$your$inventory$of$time$is

perishing.$Businesses$throughout$the$hospitality$industry$deal$with$the$perishability$of$services$through

peak$and$offKpeak$pricing.$Perishability$is$a$signiHicant$problem$for$businesses$facing$Hluctuating$demand.

For$example,$restaurants$must$hire$extra$staff$members$to$keep$service$quality$up$to$expectations$during

peak$dining$hours.

A$company$that$leveraged$perishability$to$create$a$new$service$is$Zipcar,$the$byKtheKhour$car$rental

company$whose$motto$is$"Wheels$when$you$want$them"$(Zipcar,$2011).$MembershipKbased$Zipcar,

founded$in$2000,$provides$automobile$reservations$to$its$members,$billable$by$the$hour$or$day.$The

solution$for$sale$by$Zipcar$is$the$ability$for$an$individual$or$family$to$possess$fewer$cars$through$renting

an$extra$vehicle$when$needed.$"Wheels$when$you$want$them"$gives$Zipcar$a$clear$point$of$differentiation

from$conventional$car$rental$companies,$with$their$focus$on$multipleKday$rentals.

These$four$characteristics$that$set$services$apart$from$goods$require$speciHic$responses$in$marketers'

product$strategy:

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Counter$intangibility$with$differentiation;$for$example,$a$brand$image$that$sets$your$offering$apart. Transform$inseparability$into$an$opportunity$to$build$loyalty$by$empowering$frontline$employees to$throw$in$"extras"$or$otherwise$customize$the$service.

Minimize$variability$with$training$for$consistent$service$quality,$especially$across$multiple locations.

Offset$perishability$by$managing$for$productivity;$for$example,$using$technology$to$forecast demand.

Services$for$Consumers$and$for$Businesses

As$with$classes$of$goods,$the$class$in$which$a$speciHic$service$Hits$affects$marketing$decisions$about$it.$Like

goods,$service$offerings$can$be$divided$into$those$sold$to$consumers$(B2C)$and$those$sold$to$businesses

(B2B),$which$can$be$distribution$or$consulting$services.

Everything$sold$is$accompanied$by$a$service$encounter.$Even$retailers$of$products$must$focus$on$service,

because$service$is$part$of$what$causes$a$consumer$to$choose$one$retailer$over$another.

In$2011,$the$appliance$retailer$hhgregg$launched$a$marketing$initiative$to$attract$buyers$by$focusing$on

product$training$of$its$sales$staff.$While$hhgregg$recognized$that$competitive$pricing$and$product

selections$were$important,$it$realized$customer$service$was$a$factor$on$which$it$could$base$its$competitive

differentiation.$That$strategy$grew$from$the$insight$that$customers$were$looking$for$knowledge$about

product$features$to$help$them$make$their$choices$(Olson,$2011).

Like$the$B2C$companies$that$sell$goods,$consumer$services$can$be$classiHied$into$the$four$categories$of

convenience,$shopping,$specialty,$and$unsought,$based$on$how$consumers$make$buying$decisions.

B2B$companies'$service$offerings$can$be$categorized$as$distribution$or$consulting,$as$shown$in$Table$3.4.

Table$3.4:$Service$classi<ications

Consumer$Services

Convenience Shopping Specialty Unsought

Business$Services

Distribution Consulting

Breaking

bulk

Assembling

lots

Creating

assortments

Finance Operations Marketing Personnel

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Most$service$providers$sell$offerings$that$<it$one$niche$in$either$the$consumer$or$business$classi<ication$of services.

Distribution$services$involve$the$function$of$breaking$bulk,$assembling$lots,$and$creating$assortments,

which$are$discussed$in$Chapter$4$on$Place.$Consulting$services$involve$offering$expertise$that$a$client

company$needs$occasionally,$but$not$on$a$continual$basis.$Consultants$provide$solutions$in$four$broad

areas:$Hinance,$operations,$marketing,$and$personnel,$as$the$following$examples$illustrate.$Accountants

serve$the$Hinancial$area;$plumbers$Hit$under$operations;$an$advertising$agency$assists$the$company's

marketing$department;$a$provider$of$temporary$employees$Hills$a$need$in$the$personnel$category.$It$may

be$a$stretch$to$think$of$janitors,$plumbers,$groundskeepers,$and$the$like$as$"consultants"—keep$in$mind

our$deHinition.$Consulting$services$are$any$that$a$company$needs$occasionally,$but$not$on$a$continual

basis.

Most$service$providers$specialize$in$selling$an$offering$that$Hits$one$niche$in$either$the$consumer$or

business$classiHication.$Like$services$sold$to$consumers,$B2B$services$must$be$understood$in$terms$of

their$intangibility,$inseparability,$variability,$and$perishability$if$they$are$to$be$marketed$successfully.

A$growing$trend$in$the$marketing$of$B2B$offerings$describes$product/solution$bundles$as$"solutions,"

which$renders$the$boundaries$between$product/service$classiHications$less$clean.$This$word$choice

conveys$the$serviceKdominant $logic$underlying$the$sales$pitch,$recognizing$as$it$does$that$all$prospective

buyers$are,$on$a$fundamental$level,$seeking$a$solution$to$a$deHined$problem.

Service$Strategy$in$Action

Consider$the$hospitality$industry.$For$consumers$of$overnight$stays,$the$"product"$is$a$mix$of$amenities

with$nothing$new$to$take$home$(except$perhaps$the$complimentary$toiletries).$Every$hotel$guest$expects

a$bed$and$a$bathroom.$The$business$strategy$for$any$hotel$or$multiKhotel $chain$builds$from$a$target

customer—anywhere$from$bargain$to$luxury$traveler—and$a$customer$value$proposition$that$dictates

what$amenities,$at$what$price,$will$make$up$the$service$offering.$Travelers$who$stay$in$Red$Roof$Inns

choose$a$bed$for$the$night$based$on$the$reliability,$Hitness$for$use,$and$price$of$the$service$they'll$receive,

just$as$those$who$stay$in$a$Kimpton$boutique$hotel$do.

Both$hoteliers$deliver$a$"solution$for$sale,"$investing$resources$to$deliver$a$level$of$comfort$and$a$quality

of$experience$that$meets$consumers'$expectations.$Kimpton$may$provide$an$assortment$of$amenities,

such$as$wireless$Internet$access,$complimentary$breakfast,$and$pillowKtop$mattresses,$while$Red$Roof$Inn

provides$little$more$than$free$parking$and$a$loyalty$reward$program.$Both$are$the$result$of$fundamental

strategic$decisions$that$help$each$company$achieve$competitive$differentiation$within$its$target$market

niche.

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For$another$example,$consider$Agent$Anything,$a$company$created$to$address$the$needs$of$two$groups$of

people:$those$who$need$help$with$occasional$tasks,$and$college$students$who$want$to$earn$extra$money

without$the$commitment$of$a$regular$job.$The$company's$service$consists$of$listing$"missions"$(tasks)$that

"agents"$(college$students)$accept,$for$mutual$beneHit.$The$business$strategy$for$Agent$Anything$is$to

attract$and$serve$two$target$customer$groups$who$each$become$the$supplier$of$what$the$other$wants.

Ideally,$both$beneHit$from$the$value$proposition.$And$yet,$the$characteristics$of$services—intangibility,

inseparability,$variability,$and$perishability—could $undermine$this$business$model$if$not$carefully

managed.

Field$Trip$3.4:$Agent$Anything

Visit$the$website$of$Agent$Anything$(www.agentanything.com$(http://www.agentanything.com/)$).

What$concerns$do$you$see$for$the$marketing$strategists$of$Agent$Anything$in$terms$of$their$service's

intangibility,$inseparability,$variability,$and$perishability?

As$has$been$shown,$many$offerings$bought$by$businesses$and$consumers$are$actually$a$mix$of$goods$and

services,$while$some$exist$purely$at$the$service$end$of$the$continuum.$For$service$offerings,$intangibility,

inseparability,$variability,$and$perishability$are$issues$that$must$be$dealt$with$in$addition$to$the$product

strategy$decisions$inherent$in$the$core$service,$expanded$service,$and$service$concept$perspectives.

These$issues$unique$to$service$offerings$can$be$leveraged$to$create$a$compelling$perception$of$value.

Attention$to$differentiation$counters$the$intangibility$of$a$service,$attention$to$empowering$customer

service$staff$can$turn$inseparability$into$loyalty,$training$can$minimize$variability,$and$attention$to

productivity$(often$through$technology)$can$offset$perishability.

Questions$to$Consider

It$can$be$harder$to$sell$an$intangible$service$than$a$tangible$product.$Pick$one$of$the$cells$in$Table$3.4,

Service$ClassiHications$and$name$a$service$offering$in$that$class—for$example,$business$remodeling

service$under$Consulting$(Operations).$Describe$a$service$in$your$chosen$category$in$terms$of$the$four

ways$a$service$is$different$from$a$product—its $intangibility,$inseparability,$variability,$and

perishability.$Does$one$of$these$aspects$suggest$a$solution$for$sale$that$could$be$used$as$a$point$of

competitive$differentiation$in$a$marketing$campaign?