Marketing of services

A question raised by a student at the Advanced Diploma of Marketing was – what difference, if any, is there between the marketing of services and the marketing of manufactured products.

Although there are many differences, the one that stands out as the most important and significant, to my mind, is the customer’s understanding or lack of understanding of what he is, in fact buying.  My experience in both types of market has shown that when buying a manufactured product the specifier or end - user usually has a good appreciation of the differences in the products available to him and the value for money involved.  The various features and the resulting benefits in using the products are appreciated and understood.

But, when the same buyer is involved in acquiring services, his level of what benefits he is paying for fall to a dismally low level of appreciation.  Unaware of this problem, suppliers continue to over engineer their services in a spiraling effort to outdo their competitors.  Services are; consequently, becoming increasingly sophisticated and are grossly outpacing buyers’ appreciation of what the services entail.  The resultant effect is that when faced with the choice of more than one competitive service, the buyer will usually go the cheapest route simply because he cannot understand why two similar services should cost so much different.

All services fall into a similar model of a considerable gap between the sophistication of the supplier and the ignorance of the buyer.  Shipping, Logistics, Security, Car Hire and Banking are just a few examples.

The solution to this dilemma can be approached from two sides.  The one to ensure the education of buyers so that they become more aware of the benefits involved in buying the specific services and the other is to accept that end-users will never quite understand what they are buying; consequently, redesigning the service around fewer cost generating components.

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