The opportunities and challenges of marketing Services Essay
The opportunities and challenges of marketing Services
Abstract. This paper gives the readers the background to understand how intangibility of services affects customers’ evaluation of service quality. The paper begins with the various views regarding intangibility of services from scholars. Some view intangibility as important characteristics in distinguishing products from services. Others look at intangibility as insufficient condition to divide products and services.
Then, the two main approaches of tangibilization, operation-based and marketing-based tangibilization are examined. The opportunities and problems in tangibilizing services are followed. Next, managerial implications tell marketing practitioners how they should exploit the opportunities and minimize the impacts of tangibilization problems. The paper is ended with the future research to give readers the list of unanswered questions in the areas of service tangibilization.
Among the four characteristics; intangibility, inseparability, variability, and perishability; which differentiate products from services, there is argument that the single most important characteristic is intangibility. Moreover, it has been said that intangibility is the key to determining whether or not an offering is a service or product (Zeithaml and Bitner, 1996). Indeed, the broad definition of services implies intangibility as a key determinant of whether an offering is a service or not (Oberoi and Hales, 1990; Zeithaml and Bitner, 1996). This intangibility characteristic has a profound effect on the marketing of services (Lovelock, 1991; Rushton and Carson, 1989). This characteristic, intangibility, has been found in many literatures to be the most likely reason for the other three characteristics; inseparability, variability, and perishability.
However, some scholars have argued that the intangible-tangible dimension is difficult for consumers to understand, and that the importance of intangibility might
have been overemphasized (Bowen, 1990; Wyckham et al., 1975). They proposed that the service provider’s offer is their “productive capacity”, rather than the tangible or intangible nature of the offer. In other instances, some scholars claim that it is nearly impossible to say that a certain business
offering is pure product or pure service. The use of products/services bundle is proved to be more usable than the traditional approach of categorizing products and services and their tangibility/intangibility. The products/services bundle refers to the inseparable offering of many goods and services (Gronroos, 1977; Levitt, 1980, 1981). This fact, which has been recognized in the classification scheme of others, suggests that the conceptualization of “the bundle” may not be separable in the consumer’s evaluation of service quality. This results in a product and service continuum, where highly tangible goods are placed at one end of one continuum, and
highly intangible services are placed at the opposite end, and the goods service bundle is located somewhere in between the two.
Despite contradictory opinions regarding the uses of tangibility and intangibility to differentiate services, the attempts to make services more tangible proves to produce fruitful results in the marketing of services. This paper explores the opportunities and problems in doing so. Also, the paper provides some managerial implications for marketing practitioners.
2. Approaches to Service Tangibilization There are two main approaches to service tangibilization. Operation-based tangibilization (OBT) means the attempts to tangibilize operational activities conducted by service firms during the service encounter process to decrease clients’ sense of intangibility after the encounter. For example, Parasuraman et al. (1985) and Fitzsimmons and Fitzsimmons (1994) defined tangibility by examining the extent to which hotel interiors are well decorated and whether the employees are dressed in uniforms where the clients are staying.
The other type of tangibilization is called Marketing-based tangibilization (MBT), which assists the service providers in unifying consumers’ expectation, decision analysis, and evaluation (EDEM) via marketing efforts. Examples of marketing-based tangibilization practices are pictures of tangibilized equipment and decoration at the points of services or in marketing materials. MBT is beneficial in lowering, or even unifying, EDEM among the consumers and market segments.
Hence, these actions enlarge the market scale, raise the standardization of services, and consequently reduce costs and overhead. There are 6 strategies for marketing-based tangibilization. First, Quantitation means the techniques that represent service contents with quantitative cues, such as numbers, statistics, measures, and other numerical data. Management academicians take quantitation as a synonym for Proceedings of the International Conference on Computer and Industrial Management, ICIM, October 29-30, 2005, Bangkok, Thailand clearness, preciseness, accuracy, definitude, and even explicity (David, 1999).
From the practical perspective, service cues such as price, history of the providers, financial and capital conditions, amount of employees and existing clients, and other quantifiable information are the practices (Grove et al., 1995). If services can be portrayed and illustrated with quantitative cues, then it is easy for consumers to perceive exact conditions of services, and hereafter feel the services to be tangible. Second comes ranking, which is defined as a service provider’s relative order in contrast with competitors or its counterparts by comparing the service contents.
The ranking for top 50 education institutes is a typical example of ranking. Third, factualization is the technique that service providers use to illustrate their services by a literal proclaimed statement, illustration, and representation such as figures, pictures, and images, properly setting and equipping at a point of service and a demonstration of services, among others.
Expectations play a major role in determining consumers’ post-consumption service quality evaluations. It is therefore important that the service marketer understands these expectations across the intangibility continuum. When service providers know the consumer’s quality expectations, they are in a position to develop marketing strategies for service delivery. At this point, it appears that the first task for the service provider is to define adequately the service which is being delivered to the consumer. One must determine whether the outcome of the service act results in a tangible possession, an intangible or a service – product bundle. Next the service provider must determine whether the process is or is not experienced by the consumer.
The tangibility index and the tangibility-intangibility matrix are a good starting point for this analysis. Understanding the range of consumer experiences and service outcomes as they relate to intangibility will assist the service provider in planning strategic marketing options for the service. If intangibility increases a consumer’s perception of risk, then the promise of reliability should reduce it. Being reliable and becoming known for reliability in the service arena reduces a customer’s expectations by reducing the need for service recovery (Berry and Parasuraman, 1991). However, businesses need to be cautious in promoting their reliability.
Overstating or exaggerating claims concerning reliability can have the effect of raising consumer expectations unnecessarily. Businesses should work on being reliable first, then work on letting the consumers know about it through MBT. Insuring reliability means a management commitment to service quality. As in the production of tangibles, the production of intangibles requires standardization without compromising customization potential. Standardization of services requires the use of hard and soft technologies to provide consistent service to customers. Hard technologies, or replacing company personnel with machines, can help insure reliability of routine tasks.
Special Issue of the International Journal of the Computer, the Internet and Management, Vol. 13 No.SP2, October, 2005