Executive Summary

A service is any act or performance that one party offers 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 tangible product. As the United States has moved increasingly toward a service economy, marketers have become more interested in the special challenges involved in marketing services.

Services are intangible, inseparable, variable, and perishable. Each characteristic poses challenges and requires certain strategies. Marketers must find ways to give tangibility to intangibles, to increase the productivity of service providers, to increase and standardize the quality of the service provided, and to match the supply of services during peak and nonpeak periods with market demand.

Service marketing strategy covers three additional Ps: people, physical evidence, and process. Successful services marketing calls not only for external marketing, but also for internal marketing to motivate employees and interactive marketing to emphasize both "high-tech" and "high-touch" elements.

Because services are generally high in experience and credence qualities, there is more risk in their purchase. The service organization therefore faces three tasks in marketing: (1) It must differentiate its offer, delivery, or image; (2) it must manage service quality in order to meet or exceed customers' expectations; and (3) it must manage worker productivity by getting its employees to work more skillfully, increasing the quantity of service by surrendering some quality, industrializing the service, inventing new product solutions, designing more effective services, presenting customers with incentives to substitute their own labor for company labor, or using technology to save time and money.

Even product-based companies must provide support services for their customers. To provide the best support, a manufacturer must identify and prioritize the services that customers value most. The service mix includes both presale services

(such as facilitating services and value-augmenting services) and postsale services (customer service departments, repair and maintenance services).

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