IS THE MARKETING OF SERVICES DIFFERENT? A HISTORICAL PERSPECTIVE

IS THE MARKETING OF SERVICES DIFFERENT? A HISTORICAL PERSPECTIVE
In 1979 Gary Knisely, a principal of the consulting firm Johnson Smith & Knisely, asked the above question to practicing services marketers. Specifically, Knisely interviewed several high-ranking marketing executives who had all gone to work in the consumer service industry after extensive experience in the consumer packaged goods industry (known for its marketing prowess).These executives found differences, all right. Their discoveries came from attempts to apply (with mixed success, it turned out) consumer goods marketing practices directly to services. James L. Schorr of Holiday Inns Inc., formerly with Procter & Gamble, found that he could not overlay consumer goods firm’s marketing system onto a service firm. He, and the other executives interviewed, expressed certain recurring themes. First, more variables exist in the marketing mix for services than for consumer goods. Schorr claimed that in a service business, marketing and operations are more closely linked than in a manufacturing business; thus the service production process is part of the marketing process. Second, customer interface is a major difference between goods marketing and services marketing. Executives from packaged goods companies never had to think in terms of a direct dialogue with their customers. For Schorr, the marketing of hotel rooms boiled down to a “people-on-people” sale. Robert L.Catlin, in relating his experience in the airline industry, stated, “Your people are as much of your product in the consumer’s mind as any other attribute of the service.” People buy products because they believe they work. But with services, people deal with people they like and they tend to buy services because they believe they will like them. This makes the customer-employee interface a critical component of marketing.
The executives also commented on how the marketing mix variables common to both goods and services have vastly different implications for marketing strategy in the two industries. In the distribution and selling of services, the firm cannot rely on well stocked shelves past which the consumer can push a cart and make selections. Consumers’ exposure to the full range of need-fulfilling service products may be limited by the salesperson’s “mental inventory” of services and how he or she prioritizes them We can say that the service product manager is competing for the “mental shelf space” of the firm’s sales personnel. For Rodney Woods, group marketing officer at United States Trust Co., pricing was the most critical factor in the marketing of services versus products. For Woods, determining the costs associated with service production and delivery proved very difficult, much more of a challenge than he had faced in his earlier career working with such large packaged goods companies as Pillsbury, Procter & Gamble, and Bristol-Myers. Also, the benefits of using price as a promotional weapon were not as apparent. Promotional price cuts tended to erode hard fought positioning and image. While scholars debated early on the issue of whether marketing management differs for goods versus services, for top managers with experience in both areas the differences were pronounced in 1979. They still are today. The differences these early service marketers noted were the impetus for many of the ideas, concepts and strategies practiced today.
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Services Marketing