A Custom Research Paper on Service Marketing

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Over the years, the importance of manufacturing has reduced, allowing the services economy to flourish. World over the contribution of the service sector to the economy has increased. In fact, a study by OECD in 2000 entitled, "The service economy" outlined the evolution of the service economy, especially in knowledge-based areas, while examining its affects on business and society. The report states that manufacturing's contribution to GDP is as less as 20% and that of services has risen to more than 70% in some OECD countries, where services are considered to be playing a major role in economies. The report goes on to say that even as the importance of services has augmented, the two sectors, manufacturing and services are increasingly becoming interrelated. More and more products are bundled with servic es. Even in other parts of the world services are playing a dominant role. In UK, Western Europe, Australia and Japan, along with the US, for instance, consumers spend more on services than on tangible goods. In fact, almost two thirds of the workforce in the UK is engaged in the service sector.

Bidhi Chand, Professor and Chairman, Department of Commerce and Business Management at Punjab University, Chandigarh agrees in the book, Marketing of Services (Rawat Publications, 1994), edited by him that the services sector occupies an important role in modern economies and in India it is growing in importance as it accounts for as much as 40% of exports.

What are Services?

According to Payne, services can be broadly defined as "activities that have some element of intangibility associated with them, involving some interaction with the customer or with property in his possession, and does not result in transfer of ownership. He adds that a change in condition m ay occur and production of the services may or may not be closely associated with the physical product." Peters and Waterman define services as those separately identifiable, essentially intangible activities, which provide want-satisfaction, and are not necessarily tied to the sale of a product or another service. Then again, Philip Kotler says, "A service is 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."

In general services are intangible, perishable want-satisfiers. The OECD report says, "Services are a diverse group of economic activities that include high technology, knowledge-intensive sub-sectors, as well as labour-intensive, low-skill areas. In many aspects, service sectors exhibit marked differences from manufacturing - although these distinctions may be blurring." In simpler terms, services are a diverse group of activities not related directly to manufacturing of goods, mining or agriculture. Instead, they involve the provision of human value added in the form of labor, advice, managerial skill, entertainment, training, intermediation and others. Unlike manufactured goods, which can be stored, distributed and consumed without direct interaction with the entity that produced the good, services cannot be inventoried and must be consumed at the point of production.

Why Services Marketing?

Marketing is a discipline, which is influenced by the travails of the changing business environment and the global economy. As more and more economies became service-oriented, the marketing functions also found new and unique ways of extending the discipline to the services functions. A significant amount of Services Marketing literature has been developed since the early 70's, so much so that to day, Services Marketing is a standalone academic discipline. However, the marketing of services is not just an extension to the marketing of goods. It has its own characteristic approaches, models and structures, which include a whole range of services from hotels, leisure, airlines, professional and medical services, to name a few.

The People Factor

Services' marketing is a broader function than product marketing because it is more dependent on the people factor. Though the 4Ps of marketing ear important along with physical evidence and process, the people factor is the one that decides the success of the service. While products ca n sell on their own based on their features, aesthetics etc, services have to rely heavily on the service giverwho is a human being. The people are where the variability part of the service characteristics comes into picture. Because no person is same, service offered by different people would differ.

Though technology has minimized this reliance, the fact remains that services are inherently dependent on people. Technological advances today are narrowing the gap between services and products. Alongside, the relationship between the companies and their customers is becoming more intimate. Standardization has given way to customization and new buzzwords like `mass customization' emerge by the day. Such changes have resulted in the spurt of service companies and new businesses based on a wide variety of services have mushroomed.

Consequently, professional services, as a business, have evolved as the mainstream business. As a business it is a plain conceptclients seek the help of consultancies because they consider them are less risky, profitable or less time-consuming to use rather than relying on inside help because either they may not be equipped with the skills to handle the situation internally, or they don't have the time to do so or any other reason specific to the company. Consultancies on their part charge a fee for their services. IT consultancy services, the biggest and most profitable one these days, have come to occupy the center stage in the global economy contributing significantly to global business. As a result, companies like Microsoft, IBM and even Hewlett-Packard are some of the big names in the field catering to a significant population of businesses around the world. Marketing for these companies rests on the pillars of price, value proposition to the client and customer relationship management.

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