TheServicesMarketingChallenge

HowtoDefyObstaclesandBetterPromoteYourOfferings
ByJamesAlexAlexander,Ed.D.

Accordingtorecentdata,in28%oforganizations,nobodyisinchargeofservicesmarketing.

Thisalarmingstatisticsupportsthefollowingcorollary:foreveryservicesorganization,the
abilitytomaintainfocusinthemarketplaceismandatoryforbotheffectiveperformancetoday
andbuildingcompetitiveadvantageinthefuture.Focusisimportanttoallbusinesses,butits
vitaltoservicesorganizationsbecausethemeansofproductionoccursbetweentheearsofa
finitegroupofpeople.Thus,usingvaluableresources(personnel)onnoncoreactivitiesis
wastedopportunity.Infact,aresearchstudyconductedbytheauthorshowsthatpracticesthat
createconsistentfocusareimportantdifferentiatorsbetweentopperformingservices
organizationsandtheirlowerperformingcounterparts(Figure1).Creatingandkeepingthis
focusisacoreelementofservicesmarketingsmission.1

Theenablersofmarketmessage,brandbuilding,pricing,andportfoliomanagementwillbe
examinedinfuturearticles,butfirstabriefdiscussionontheuniquechallengesofservices
marketing.

TheServicesMarketingChallenge|1|AlexanderConsulting

FormidableServicesMarketingAdversaries
Inmanyways,mostbusinessestodayaredoingalousyjobofmarketing.Thecostofcapturing
customerscontinuestoriseasbuyingprocessesbecomemorecomplexandsellingcycles
lengthen.Atthesametime,customerloyaltyiserodingonaverageaU.S.basedcompany
loseshalfofitscustomersinfiveyears.2Forcedbythechangingexpectationsofcustomersand
competitiveposturing,mostcompaniesexpectthatonethirdoftheirsalesoverthenextthree
tofiveyearswillcomefromnewproducts/servicesandlineextensions.Yet,onehalfofnew
offeringslaunchedfailtomeetbusinessgoals.3And,twothirdsofnewofferingideasnever
achievemarketsuccess.4Socurrently,about50to65centsoutofeverymarketingdollar
investedinnewofferingsiswasted.

Theabovemarketingchallengesareformidableenoughandapplygenericallytoanyandall
organizationsnomatterwhattheydevelop,sell,anddeliver.However,servicesmarketersface
someadditionalchallengesthatfurtherconfoundtheproblem.

TheDifferencesBetweenProductsandServices
Servicesareadramaticallydifferenttypeofofferingthanproducts,andapplyingtraditional
marketingapproachestoservicesjustdoesntwork.

Firstofall,inmostcases,theproductsproducedbytraditionalorganizationseasilycanbeseen,
felt,anddescribed.However,servicesareintangible.EvertGummessonprobablysaiditthe
mosteloquently,stating:Servicesaresomethingthatcanbeboughtandsoldbutcantbe
droppedonyourfoot.Thechallengeofdealingwiththeaddedcomplexityofintangibilityalone
raisesthebar.

Inaddition,someothermajordifferencesbetweenthetwotypesofofferings,asshownin
Figure2,areworthnoting:Thesedistinctionshaveafundamentalimpactonhowoneproduces,
markets,sells,delivers,supports,andmeasurestheperformanceofservicesandthesuccessof
thesbusinessitself.Whatmayhaveworkedextremelywellinmanagingatraditionalproduct
basedorganizationwillbeineffectiveintheworldofservices.

TheServicesMarketingChallenge|2|AlexanderConsulting

Severalpeoplehavehelpedmakethedistinctionbetweenproductsandservices.5Through
experiencewehavelearnedthattryingtoproduceandmanageservicesinthesamewaythat
weproduceandmanageproductsdoesntwork.Fundamentaldifferencesbetweenproducts
andservicesinclude:productionprocesses,offeringgoals,customerinvolvement,quality
controlaswellasmoraleandskills.

Production
Productsarebuilt.Thecomputersandprinterscomputerresellersofferareallmanufactured
andassembledontheproductionlinesofhardwaremanufacturersinhighlycontrolled
environments.Theyarephysicallymolded,soldered,inserted,welded,glued,assembled,and
boxed.Productscanbedirectlyexperiencedandtestedpriortousage.Featurescanbeseenand
functionscanbeobserved.Thecustomerownsanobject.

Servicesareperformed.Servicesaredeliveredlive,inrealtime,usuallyatthecustomers
location.Inmanyinstances,productsareinvolved,butitistheserviceproviderwhoison
stage.Thecustomersperceptionsarebasedupontheactualactionsoftheserviceprovider.
Whencomputerresellerpersonnelgoouttoacustomerlocationtoinstallacomputernetwork,
whatthecustomerseesisaperformance.Thecustomerownsanexperience.

Goals
Theproductiongoalofproductsisuniformity.Variationmustbecontrolled.Themanufacturers
ofthecomputerresellershardwarestrivetohavealloftheirequipmentperforminexactlythe
sameway.Thecomputerresellerdependson/hopesthatallmodelsworkthesameway.The
resellerassumesthatpartsfromonemodelnumberworkonanotherunitofthesamemodel
number.Theproductisgeneric.

Thegoalofperformingservicesisuniquetoeachcustomerandmorecomplicated.Althoughthe
processofdeliveringtheservice,suchasonsiteequipmentrepairorsystemsintegration,may
bethesame,thesuccessfulserviceprovidermakestheexperienceuniquetothespecific
customer.Theactualprocessofperformingtheservicemay(andprobablyshould)staythe
same,butvariationisrequiredtomeettheuniquenessofthecustomerandthesituation.The
servicesofferingispersonalized.

CustomerInvolvement
Withproducts,thecustomerisrarelyinvolvedinproduction.Productioncouldoccurinthenext
countyorthenextcountry.Forthemostpart,thecustomerdoesntcare.Thepurchasersofthe
productssoldbythecomputerresellerdontknoworcarewhethertheircomputerswere
manufacturedinTexasorBrazil.Theclosestthecomputerresellerwastobeinginvolvedin
productionmighthavebeenavisittothemanufacturerwithatouroftheproductionfacility.

Withservices,thecustomeroftenisinvolvedintheserviceperformance.Inmanycases,the
serviceisperformedupcloseandpersonal.Becauseofthis,thecustomeroftenisinvolvedin
theactualperformance.Eachcustomerinterpretsthingsdifferently.Sincetheperformerisright
there,onstage,heisoftensubjecttospecialrequeststhatmaynotbeapartoftheoriginal
agreement.

TheServicesMarketingChallenge|3|AlexanderConsulting

QualityControl
Intheproductionofproducts,qualitycontrolisastandardpartoftheprocess.Theoutputsof
theproductionprocessarecomparedtostandardizedspecifications.Smartmanufacturershave
builtrobustpracticestobuildqualityinandtocheckqualityateachpointintheproduction
process.Themanufacturerdefinesquality.Thecomputerresellerlooksatthequalityofthe
goodsitbuysandsellsbyperformanceversusmanufacturerclaims,reliability,suchasMTBF
(meantimebetweenfailures),andthenumberofDOAs(deadonarrivals).Whenproductsare
improperlyproduced,theycanbeidentifiedthroughinspectionorrecalledfromthefield.The
manufacturerofdefectiveprinterscouldsubstituteaprinterwiththesame,similar,orgreater
capabilities.

Inservices,qualitycontrolisconductedbythecustomer.Thecustomerkeepsthespecifications
inhisorherhead.Thecustomercomparestheserviceexperiencetotheexpectations
developedpriortotheperformance.Unliketheproducersofproductsthatrarelychange
specifications,customersexpectationsaremuchmorefluid.Infact,customerexpectations
oftenchangeduringtheperformance,addingtothecomplexityoftheperformance.Although
thecomputerresellermaysellexactlythesameservicetotwosimilarappearingbusinessesin
thesamefield,eachwilldefinequalitydifferently.Whenservicesareimproperlyperformed,
apologiesandreparationaretheonlymeansofrecourse.Apoorperformanceisusually
discoveredimmediately.Thecustomerofthecomputerresellerknowsimmediatelyafterthe
trainingsessionwhetherthetrainingwasanygood.Althoughtheresellerrefundsthemoney
orofferstoprovidethetrainingagain,thedamagehasbeendone.

MoraleandSkills
Themoraleandskillsofproductionworkersisimportant.Qualifiedworkerswithgoodattitudes
improveefficiencyandincreasethelikelihoodofproducinghighqualityproducts.

Themoraleandskillofserviceperformersiscritical.Theyperformduringmomentsoftruthin
realtimeatthecustomerslocation.Theymustbewillingandabletobendtheruleswhere
appropriate,becreativeinvaryingcustomersituationsandbeaccountable(atleasttosome
degree)forprofitability.

Hence,differentcharacteristicsandcompetenciesinpeoplemustbesought;different
managementsupportsystemscreated;anddifferentmetricsevaluatedtorewardperformance
andguidetheenterprise.Allofthisisfurthercomplicatedbecause,inmanycases,sbusinesses
stillproduce,market,andsellproducts,furtheraddingtothecomplexityandthechallenge.

Inorganizationsthatofferbothproductandservices,servicesmarketingmustcoexistwith
productmarketing.Oftenthesetwocompetebothinternallyandexternallyforresourcesand
themindshareofstakeholders,withdifferentobjectives,differentfocus,misalignment,mixed
messages,andwastedresourcestheresult.

Oftennobody,orthewrongpeople,isinchargeofservicesmarketing.Thisisclearlypointedout
byFigure3.

TheServicesMarketingChallenge|4|AlexanderConsulting

Althoughthisquestionisspecifictoprofessionalservicesorganizations,theresultsarequite
telling.Lessthanhalfofrespondentssurveyedhavededicatedservicesmarketingpersonnel.6
Thisisarecipefordisaster.

Fortunately,withtherightfocus,youcanavertdisaster.Becausemarketingservicesinsidethe
organizationisjustasimportantasmarketingservicesoutsidetheorganization,letyour
organizationknowwhereyoustandandhowyouplantoapproachservicesmarketing.The
formidablechallengeswediscussedaremanageablewiththeappropriateservicesmarketing
approach.

References
1.

2.

3.

4.

5.

6.

Alexander,JamesA.2002.Thestateofsbusiness:Aninternationalreportofprogress,performanceandbest
practices.AFSMInternational.May.
Reichheld,FrederickF.1996.Theloyaltyeffect:Thehiddenforcebehindgrowth,profits,andlastingvalue.
Boston:HarvardBusinessSchoolPress.
Cespedes,FrankV.1994.Industrialmarketing:Managingnewrequirements.SloanManagementReview.Spring.
Donath,Bob.1992.Thecustomerasconsultant.SalesandMarketingManagement.September.
Schwartz,M.H.1992.Whatdothewords"product"and"service"reallymeanformanagement?Quality
Progress.June.
Zemke,Ron.1992.Theemergingartofservicemanagement.Training.January.

7. Alexander,JamesA.2000.Thestateofhightechprofessionalservices:Anindustryintransition.

TheServicesMarketingChallenge|5|AlexanderConsulting

JamesAlexAlexanderisthefounderofAlexanderConsulting,amanagementconsultancythat
helpsproductcompaniescreateandimplementprofessionalservicesstrategies.Formore
information,visitwww.alexanderstrategists.comorcall2392837400oremail
alex@alexanderstrategists.com.

AlexanderConsulting

TheServicesMarketingChallenge|6|AlexanderConsulting