Service marketing and the people factor
By Prasanna Perera


The marketing of services, has unique challenges. Services unlike products are intangible, which means in most instances it is a basic promise that is offered to consumers. For e.g. life insurance, which is one of the most intangible forms of service offerings. (You buy into a basic promise, which you hope is fulfilled).

John Akers CEO of IBM, puts service marketing in the correct perspective by stating "I am sick and tired of visiting production plants to hear nothing but great things about quality and cycle time`85..and then to visit customers who tell me of problems".

Service industries are quite varied. Professional services such as auditing and legal, business services such as hotels, airlines, banks, government services which relate to utilities, hospitals and law enforcement and finally non-profit services as charities and churches.

Services (Defined)

Kotler defines a service, as 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.

It must be kept in mind that services are rendered; products are possessed. Services cannot be possessed they can only be experienced, created or participated in. Here-in lies the magic and mystic of serving marketing.

Let us now move on and examine the specific characteristics of services.

Characteristics of services

The major characteristics are: intangibility, inseparability, variability and perishability.

(a) Intangibility - This is the most challenging and difficult aspect to contend with, in the marketing of services. Unlike physical products, services cannot be felt, seen and purchased. This intangibility creates uncertainty and consumer therefore look for signs or evidence of service quality. As a service provider, you must be able to make tangible the intangible, as much as possible.

(b) Inseparability - The production and consumption of a service is carried out simultaneously. In the case of physical products this is not so. For example in a restaurant, the service is provided based on the customers needs and the customer in turn consumes the service during the same service encounter. The important aspect to note here is that the client is present as the service is produced and therefore, the interaction between the service provider and customer, is a key feature.

(c) Variability - Services are highly variable, because they are dependant on the provider of the service. For example, when you visit a bank on different occasions, you may be serviced by different staff members. As such, the service that you receive is never the same. This is where the people dimension comes in and becomes very critical for success.

In order to minimise the variability of service standards, service providers should invest in people, through professional selection and training. Customer satisfaction too should be monitored, as a control mechanism. We will examine the "people" aspect in greater detail during the later part of this article.

(d) Perishability - Unfortunately, services cannot be stored. For example, a legal officer will charge a client for a missed appointment, because the opportunity missed is gone for good. It just cannot be stored for consumption at a later date. Hence, the important aspect is to produce a better match between demand and supply, in service business.

Reasons for growth in services, and Service Marketing

Let us briefly examine the major reasons:

(a) Technology and its impact

The major technological breakthroughs achieved in recent years have been one reason for the growth in services. The production of more goods or products often leads indirectly to an increased demand for services.

(b) Customer Sophistication

The customer of today is more knowledgeable, looks for convenience and is very demanding. The need for convenience, results in eating out, ready made garments and more leisure based activities.

(c) Increased Competition

This has resulted in the service element being highlighted, in order to gain a competitive advantage. For example, banks offer a range of value added services, financial service organizations offer legal services etc.

The Seven Pís

Drawing on the concept of four Pís for product marketing, the services marketing mix has been extended to 7 Pís. Included is probably the most important element in services marketing, "People".

Of all the controllable variables marketing personnel have at their disposal, the people factor is perhaps the least they can rely on in getting their marketing mix "right", and the most important one they have to get right.

The difficulty is in the inseparability of the production/consumption interface and therefore the satisfaction of not only the recipient of the service (i.e. the customer) but also the service provider (i.e. the companyís own personnel).

Service personnel are present at two levels within the organization i.e. contact personnel and support personnel. Contact personnel are those individuals whom the customer interfaces with. For example in a hotel, waiters or receptionists.

The value the customer attributes to the service provided, depends a great deal on the conduct of the contact personnel. Although customers very rarely meet support personnel, the service provided by them is very important for contact personnel.

For example if a Chef does not provide quality meals on time, the waiter will be found wanting in the eyes of the customer. Both the Chef and waiter must support each other, in order to satisfy the customer.

How can a company ensure that its personnel at both levels will provide a quality service, leaving a favourable impression on customers? The answer lies in "internal marketing", the purpose of which is to have motivated and customer focussed employees.

So how should a company, marketing services attract and maintain, the type of employees who will provide outstanding service to customers? Firstly, open and honest communication within the organization is required. Secondly, employees who have the right "people chemistry" should be employed, specially at contact level.

Thirdly, employees whose personality fits in with the organizations culture, should be employed. (Employer-employee fit). Last but not the least, able employees should be continuously trained and rewarded in customer care.

For service marketers, who care about both employees and customers, the pay off is in terms of increased motivations and satisfaction.

This in turn will result in a fruitful services encounter, where the customer will receive a higher level of service, which exceeds their expectations. Hopefully, this will lead to customer loyalty and increased levels of business activity.

A Service Marketing check list

(a) Do we strive to present a realistic picture of our service to customers?

Do not promise, what you cannot deliver. It is much better to under promise and over deliver.

(b) Is performing the service right the first time, a top priority in our company?

Service encounters are unique. You do not get a second chance. For example, a passenger checking into an airline desk. This is a service encounter. The passenger will judge the service standards of the airline, based on how the contact staff handle the "service encounter". As John Carison of SAS Airlines states, these service encounters are "moments of truth". They can either make or break customer relationships.

(c) Do we communicate effectively with customers?

Open, honest and friendly communication is the hallmark of excellent service. To be effective, communication must be two-way and customers must be encouraged to provide feedback.

(d) Do we surprise customers during the service process?

This is referred to as "delighting customers" by exceeding their expectations. For example, in a hotel, a guest would not expect a basket of fruit to be provided in a room. However, by providing this, a hotel can exceed the expectations of their guests.

(e) Do our employees regard service problems as opportunities to impress customers or as annoyances?

This requires a "service oriented mind set" where the employees are trained to convert problems into fruitful opportunities.


The marketing of services, is a specialised activity because of the innate characteristics of services. Marketing planning is more difficult and the dependency is high on the soft skills. (People, physical evidence etc).

As such, special emphasis should be placed on internal marketing, since it is a prerequisite for successful external marketing services.

"There is no specific service businesses. Every organization is in the business of providing service: Excellent service"


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