Yesterday’s marketing strategy introduced differences between products and services including intangibility, perishability, inseparability, and inconsistency. Today, I discuss specific marketing strategies for dealing with these differences.
Marketing Strategy – Implications
For the most part, marketing services involves addressing the differences listed yesterday, in many cases marketing them in a way that reduces these distinctions., making them more like products.
Strategies based on intangibility
Strategies related to marketing intangibles relate to making them more tangible. This may be done physically, like giving you a passbook to represent the money you have deposited in the bank. Or it might be done by linking some tangible element to your intangible services, such as linking a rock to insurance emphasizing the permanence by a slogan like “own a piece of the rock” used by Prudential.
Strategies based on perishability
Many of these marketing strategies revolve around pricing issues. Companies like Hotwire and Priceline were developed to implement pricing strategies in marketing travel services that have defined expiration dates. These services offer reduced charges for airlines, hotels, rental cars, etc. since large blocks of services expire at the same time. As these travel services approach expiration — close to departure time or the date of hotel usage — the service providers may market them through heavily discounts since getting something for that empty seat is better than getting nothing. This is especially true for industries with high fixed costs relative to variable costs. In these service businesses, whatever they get for the unfilled seat is mostly profit, which is a great incentive to drop the price.
In addition to pricing market strategies, service firms may use promotional marketing strategies to drive demand to fill unused services. Hence a firm might advertise heavily as the time for a concert nears to sell remaining tickets. If the concert sells out early, the company may do little or no advertising.
Strategies based on inseparability
These marketing strategies are the most comprehensive aspects showing the divergence between product and service marketing. These marketing strategies also demonstrate the overlap between marketing and management most clearly.
Inseparability means that how the service is performed is equally important as how well the service is performed, in most cases. For instance, on the inaugural cruise of the Norwegian Epic a number of problem occurred ranging from minor, such as publicizing events that didn’t take place, to technological, such as booking fee-based entertainment, then not admitting the guests because of a computer glitch, to mechanical failure, such as raw sewage backing up into a passenger cabin. Most of these market failures are an aggravation guest don’t expect to deal with on their much-anticipated vacation, but often occur, especially in a new ship. Certainly, part of marketing strategy is to minimize such events, but strategy requires that companies MUST train their employees on how to handle service failures and empower them to make the situation right.
The strategy involved in dealing with the passenger with the raw sewage backup dictates they be moved to another cabin, even if that means upgrading them to a much more expensive room or suite. If nothing is available, sound marketing strategy suggests they should have the problem fixed within a very limited amount of time and constant communication must be established to keep them abreast of the situation until it is resolved. They should also be offered a free cruise in the future or compensated in other ways for their inconvenience. Luckily, in this industry, there are a number of ways to provide compensation that have great value to the passenger, but little cost to the company, making them idea marketing solutions to service failure. Examples include priority seating at entertainment venues and restaurants., access to special areas reserved for passengers booking into penthouses and suites, tours of backstage areas of the ship, etc. Most importantly, they deserve respect and acknowledgment of the legitimacy of their complaint among personnel of the ship.
Instead, the relatively inexperienced crew did little to appease the passenger. The result was the passenger was increasingly likely to complain about other aspects of the cruise (which he did rather vocally) and spread negative word of mouth about his experience (which he did). When other passengers hear him complaining at the front desk or in the passageways of the ship, it informs their satisfaction evaluations making them less satisfied and making them more critical of service failures they directly encounter.
Strategies based on lack of permanence
Services can’t be inventoried. Services are created when customers want them, which means they may not be available when customers want them. Because consumers are likely to form dissatisfaction when they can’t obtain desired services or have to wait for them, companies need to develop capabilities to reduce wait times and/ or manipulate demand. Hence a bank might have additional staff assigned to handle the increased volume they experience at lunchtime or on Fridays so that customers don’t experience excessive lines.
Disney and other theme parks have developed instruments such as “Fast Passes” that help reduce waits for popular rides by allowing customers to wait somewhere else, thus allowing them to engage in other activities during their wait rather than standing in line. Not only does this system create customer satisfaction through shorter lines, but allows customers to spend money rather than wait in line.
They might also reduce perceived wait time by giving customers something to occupy themselves while standing in line. For instance, Disney World has created movies and theme based queues that make waiting appear part of the attraction to reduce perceptions of waiting. These may also have a positive marketing result as when grocery stores use monitors to reduce perceived waits in checkout lines. These monitors can carry information such as recipes, or other information to encourage product purchase.
Importantly, for developing sound marketing strategy, products can’t be inventoried. They also can’t undergo quality testing prior to the customer experience. This guarantees there will be failures in service delivery. Marketing strategies for dealing with this are twofold. First, companies need to develop marketing processes and procedures that reduce service failure and train employees thoroughly on these processes. Second, they need to develop contingency plans for how to handle the inevitable service failure that does emerge as part of their overall marketing strategy.
For instance, airlines consistently experience service failure — either due to bad weather, mechanical failure, or traffic interruptions. They need to develop marketing procedures and processes to deal with those failures they can control. Foremost among these is communication that is honest and complete. How long do they expect the event to last? What are they doing to fix the problem? How will disruption affect the passenger with respect to connecting flights? What are travelers’ options?
If traffic routinely delays certain flights at certain airports, part of the marketing strategy may involve investigating re-scheduling the flight to reduce the impact of traffic or work with the airport and other airlines to reduce traffic or speed the flow of traffic. Another marketing strategy might involve stepping up preventative maintenance to reduce the likelihood of mechanical failure disrupting flight schedules. For other events, such as inclement weather disrupting travel, they need to develop a marketing strategy to address these delays that creates the least inconvenience for passengers..
Unfortunately, airlines have not sufficiently developed marketing strategies to address this issue and congress is now in the process of instituting policies for their industry. Not only is it undesirable to have the federal government involved in policing the industry from a publicity standpoint, it will likely involve more extensive and expensive restrictions than if the industry had developed internal marketing strategies to address these issue themselves.
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