Further exploring yesterday’s topic, the service marketing model is shaped by five powerful forces around the world, including:
1. Government Policies – with, for example, the loosening of policies in China and the subsequent opening of doors to more Western markets, cities like Shanghai are now brimming with international brands, particularly luxury brands (as I saw firsthand when I visited the city and its Xintiandi shopping area last year).
2. Social Changes – in America what quickly comes to mind is the loosening of morals, though I do not present this necessarily in a positive light, but as an observation. In turn, the fashion industry rides upon trends that can be seen, as it’s been said, in the lengthening or shortening of womens skirts. More obviously, the availability and acceptance of online dating has built a multi-million dollar ($516 million USD in 2005) Internet cottage industry: Initially considered the last resort for the socially stunted, online dating has shrugged off its social stigma and emerged as a mainstream means for singles to find that special someone (CNN.com).
3. Advances in IT (information technology) – the above online dating example is also an example of a service made available by advances in information technology, and this has been taken to an even higher level in the past year with broadband Internet increasingly common and enabling the likes of YouTube.com to exist and flourish … talk about a success story, in a mere three years that company rocketed to a stratospheric $1.65 Billion USD purchase by Google in October of 2006.
4. Business Trends (of course) – one key trend in the U.S. is outsourcing of call centers. With an increasing emphasis on squeezing costs out of supply chains, firms are outsourcing support functions including information services, software development, process technology, distribution, and operations maintenance. This has had a rather profound impact on both economies of scale and, less beneficially, service quality control.
5. Decision Making – simply put, this critical in the delivery of any service. In the global economy, there are a lot of products that are, for the most part, at parity with regards to features and benefits, the twin pillar terms of effective advertising. So what becomes important is, for example, the roll of the reseller, or Value-Added Reseller (VAR) as it’s commonly referred in the U.S. technology products industry. The “value-added” is either in the form of an enhancement made to the original product such as, for example, when a computer retailer pre-loads software into a machine to be able to more effectively sell the PC or even increase the prices and/or margins. The other typical addition of value is a service component, such as free consultation for x amount of weeks, months, years, etc., or, for example, some form of handholding and guidance in the implementation of the product into its user environment.
What happens then is that the service that supports the sale of the product becomes very important. And also the services themselves become marketed like products. Intangible elements (back to Beckwith’s “Invisible”) typically dominate value creation, and the difference between success and failure often becomes how well the marketer knows its customer.
Posted by: Colin Mangham