Services 3
Levels of a Product
Core Product: This is the fundamental benefit or problem-solving service that the customer is truly seeking. It addresses the core need or want of the consumer. For example, the core product of a drill is the ability to make holes.
Actual Product: The tangible goods, features, design, branding, quality, and packaging associated with the product. This is what the consumer recognizes and uses. For example, the actual product of a drill includes its motor, drill bits, design, and brand name.
Augmented Product: Additional services or benefits that enhance the actual product, such as warranties, customer support, delivery options, installation services, and financing arrangements. These augmentations provide extra value and differentiation. For example, the augmented product of a drill might include a warranty, free drill bits, and online tutorials.
Importance of Each Level
Each level plays a crucial role in delivering value to the customer. The core product satisfies the primary need, the actual product provides tangible attributes, and the augmented product enhances the overall experience and builds customer loyalty.
Levels of a Service Product
The "tangible" or actual product is missing because services are fundamentally intangible. Services are actions, performances, or processes that cannot be touched or seen before purchase.
The core and augmented aspects of the product remain relevant for services. Although there is no tangible component, services still fulfill a core need and can be enhanced with additional benefits.
Implications of Intangibility
Due to the intangible nature of services, marketers often focus on managing customer perceptions and expectations through tangible cues, such as the service environment, employee appearance, and communication materials.
Service Product Example: Overnight Transportation and Delivery
Problem Solving: Addressing the customer's need to transport a package quickly and reliably. This is the core benefit of the service.
Billing Statements: Providing clear and accurate billing for services rendered. Ensures transparency and builds trust with the customer.
Tracing: Offering the ability to track the package's location during transit. Enhances customer control and reduces uncertainty.
Documentation: Supplying necessary paperwork and receipts. Provides proof of service and facilitates record-keeping.
Order Taking: Efficiently processing customer orders for delivery services. Simplifies the customer experience and ensures accuracy.
Supplies: Providing packing materials or other necessary items. Offers convenience and ensures that the package is properly prepared for shipping.
Pickup: Arranging for the package to be collected from the sender. Saves the customer time and effort.
Advice and Information: Offering guidance on shipping options and requirements. Helps the customer make informed decisions and ensures compliance with regulations.
Marketing Mixes for Services: Product Processing (Service Strategy)
People processing: Services that directly involve the customer's physical presence (e.g., transportation services, health clubs, hair salons). These services require careful management of the customer-provider interaction.
Possession processing: Services performed on the customer's physical possessions (e.g., lawn or car repairs, dry cleaning, pet grooming). These services focus on maintaining or enhancing the value of the customer's assets.
Mental stimulus processing: Services that provide experiential or intellectual stimulation (e.g., entertainment events, education, museums). These services aim to create memorable experiences or expand the customer's knowledge.
Information processing: Services that involve data manipulation or analysis (e.g., accounting, training, financial services, consulting). These services provide expertise and insights to support decision-making.
Importance of Customization
Understanding the type of processing involved is crucial for tailoring the service strategy to meet the specific needs and expectations of customers.
Marketing Mixes for Services: Promotion Strategy
Stressing tangible clues: Highlighting tangible aspects of the service to enhance customer confidence (e.g., showcasing clean facilities, well-maintained equipment, or professional staff). This helps to reduce the perceived risk associated with intangible services.
Using personal information sources: Leveraging word-of-mouth, customer testimonials, or expert endorsements to build trust and credibility. Personal sources are often more persuasive than traditional advertising.
Create a strong organizational image: Developing a consistent and positive brand reputation through visual identity, messaging, and customer interactions. A strong brand image can differentiate the service provider from competitors.
Engage in post-purchase communication: Following up with customers after the service encounter to ensure satisfaction, address concerns, and encourage repeat business. This demonstrates a commitment to customer service and builds long-term relationships.
The Role of Trust
In service marketing, building trust is essential because customers often rely on the reputation and credibility of the service provider when making purchase decisions.
Service Marketing Triangle
Company: The service provider (e.g., a hotel chain, a consulting firm).
Customers: The recipients of the service.
Employees: The individuals who deliver the service.
Internal Marketing: Treating employees as internal customers, focusing on training, motivation, and empowerment. This ensures that employees are equipped and motivated to deliver excellent service.
External Marketing: Making promises to customers through advertising, promotions, and other communication channels. This sets customer expectations and influences their perception of the service.
Interactive Marketing: Keeping promises through direct interactions between employees and customers. This is where the service is actually delivered and customer satisfaction is determined.
Facilitating Promises: Ensuring that internal processes and systems support the delivery of promised services. This requires alignment between all aspects of the organization.
Importance of Alignment
The service marketing triangle emphasizes the importance of aligning internal capabilities, external communications, and customer interactions to deliver a consistent and satisfying service experience.
Understanding the Service Experience
All products, both goods and services, deliver a bundle of benefits to the consumer. These benefits can be functional, emotional, or social.
The benefit concept is the encapsulation of these benefits in the consumer’s mind. It represents the overall value that the customer perceives.
The service experience demonstrates that consumers are an integral part of the service process. Their involvement can influence the outcome and their satisfaction.
Customer Participation
Unlike goods, where production and consumption are separate, services often require the active participation of the customer. This creates opportunities for customization and co-creation.
Creating Compelling Experiences
Economic value progresses from commodities to goods to services to experiences. As customers seek more than just functional benefits, businesses must create memorable and engaging experiences.
Examples of companies mentioned: Nordstrom (customer service), Zappos (online shopping experience), Uber (convenience and seamlessness), Neiman Marcus (luxury retail), IKEA (unique store layout and customer involvement).
Strategies for Experience Creation
To create compelling experiences, businesses must focus on understanding customer needs, designing engaging environments, and empowering employees to deliver personalized service.