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Marketing: Real People, Real Decisions
Marketing Intangibles & Services
Chapter 11
Lecture Slides
Solomon, Stuart,
Carson, & Smith
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Marketing: Real People, Real Decisions
Chapter Learning Objectives
When you have completed your study of this chapter,
you should be able to:
• Explain the marketing of people,
places, and ideas.
• Describe the four characteristics of
services, and understand how
services differ from goods.
• Explain how marketers measure
service quality.
• Explain marketing strategies for
services and not-for-profit
organizations.
©Copyright 2003 Pearson Education Canada Inc.
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Marketing: Real People, Real Decisions
Introduction to the Topic
• This chapter is about the marketing of intangibles, of which, services
form the majority of this product category.
• The marketing of intangibles is similar and
different from other goods, hence its
separation as its own topic.
• Intangibles: experience-based products
that cannot be touched.
• Intangibles are pervasive, from supporting
charities to political candidates, getting a
post-secondary education or going to a
hockey game.
• While all services are intangible to some
degree, not all intangibles are services.
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Marketing: Real People, Real Decisions
Marketing Intangibles
• Many of those in the not-for-profit, health care, legal, or cultural arts
are only recent converts to the necessity of marketing what they have
to offer to the buying public.
• Intense competition for a limited pool of
resources will do that to you!
• It is important to remember that
intangibles (including services) are
similar to products in that:
– They address customer needs
– They involve an economic exchange
– They transform resources into
something of greater value
– They can be differentiated
• The differences are more interesting.
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Marketing: Real People, Real Decisions
Marketing People, Places, and Ideas
• Entertainers and politicians can be marketed just as any product
can, just ask any of the “boy bands” currently torturing the ears of
parents with teenagers!
• Marketing people can take a number of
approaches:
– Pure selling: attempting to market the
person as they are, to target markets who
might be interested.
– Product improvement: modifying the
person’s characteristics (or talent level) to be
more attractive to target markets.
– Market fulfillment: identifying a need in
the market and developing a person whose
characteristics or talent fills that need.
©Copyright 2003 Pearson Education Canada Inc.
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Marketing: Real People, Real Decisions
Marketing People, Places, and Ideas
• Place marketing: marketing activities aimed at attracting people
or companies to a particular area. This can be for tourism purposes,
or to attract companies to invest in the area by locating facilities
there to create jobs.
• Competition between areas for people and
companies is fierce due to the limited
number of prospective “customers”.
• Idea marketing: marketing activities
that seek to gain market share for a
concept, philosophy, belief, or issue by
using elements of the marketing mix to
create or change a target market’s attitude
or behaviour.
• Cause marketing falls under this category.
©Copyright 2003 Pearson Education Canada Inc.
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Marketing: Real People, Real Decisions
Marketing Services
• Services:
intangible products
that are exchanged
directly from the
producer to the
customer.
• Intangible means
that you cannot
see, touch, or hear
the product prior to
agreeing to
purchasing it.
• Services will vary
in their
intangibility.
©Copyright 2003 Pearson Education Canada Inc.
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Marketing: Real People, Real Decisions
Marketing Services (continued)
• Four essential characteristics of services:
Intangibility
Inseparability
Cannot be seen, tasted,
felt or smelled before
purchasing
Production and,
consumption, and
from the provider.
Variability
Perishability
Service quality depends
on who provides and
under what conditions.
Cannot be stored,
for resale or
later use.
©Copyright 2003 Pearson Education Canada Inc.
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Marketing: Real People, Real Decisions
Marketing Services (continued)
• Providers deal with intangibility by carefully managing the
appearance of their facility and themselves, to convey the appropriate
desired image to customers.
• A lawyer’s office is expected to exude
competence through its nice furnishings,
well-dressed people, and equipment.
Otherwise, customers would not feel too
confident in their abilities prior to hiring
them.
• The use of standard signage, uniforms,
brand logos, characters, and now web sites
are also aimed at reducing the problems
associated with intangibility.
©Copyright 2003 Pearson Education Canada Inc.
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Marketing: Real People, Real Decisions
Marketing Services (continued)
• Service providers deal with perishability by attempting to manage
both the supply and demand for their services. An airplane taking off
with empty seats represents lost revenue, hence they will do things to
try to avoid this.
• They will attempt to manage demand by:
– scheduling appointments
– offering incentives for off-peak consumption
– offering a mix of services to appeal to
different segments
• Capacity management: the process by
which organizations adjust their offerings in an
attempt to match (supply with) demand.
• Using part-time workers also helps!
©Copyright 2003 Pearson Education Canada Inc.
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Marketing: Real People, Real Decisions
Marketing Services (continued)
• Variability is the difference in performance across time that
inevitably results from the high amount of labour content in the
production of services.
• Not all variability is a bad thing. The appeal of live theatre or
attending sports is that every performance is a little bit different, and
you do not know how it will end.
• If variability is a problem, then
standardizing policies, procedures,
materials, and equipment, training
employees, and quality control
programs are used to reduce it
inconsistency in performance.
• Encouraging variability is not
really necessary, it just happens!
©Copyright 2003 Pearson Education Canada Inc.
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Marketing: Real People, Real Decisions
Marketing Services (continued)
• Service providers attempt to address the problem of inseparability
in similar ways to intangibility, in that they must carefully manage the
service experience received by the customer.
• Service encounter: the actual
interaction between the customer and the
service provider.
• The appearance and behaviour of all those
who come in contact with customers are
critical to maintaining service quality.
• Disintermediation: the process of
eliminating interaction between customers
and service providers. Encouraging selfservice or using ATM’s helps to take some of
the contact out of the service provided.
©Copyright 2003 Pearson Education Canada Inc.
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Marketing: Real People, Real Decisions
The Goods-Services Continuum
• Most products are a combination of goods and services, with varying
degrees of attention needed to the service elements.
• Good-dominated products
will add value to what they have
to offer with supporting services,
that helps to differentiate them
from their competition.
• Embodying: the inclusion of
a service with a purchase of a
physical good.
• These services need not be free
to add value, many maintenance
programs are excellent profit
generators for retailers.
©Copyright 2003 Pearson Education Canada Inc.
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Marketing: Real People, Real Decisions
The Goods-Services Continuum
• Equipment- or facility-driven services, such as restaurants need
to be concerned with:
– Operational factors
– Locational factors
– Environmental factors
• People-based services are
increasing in importance as
consumers feel more and more
pressed for time, and are
willing to pay to have things
done for them.
• Personal attention is key to
maintaining quality in these
types of services.
©Copyright 2003 Pearson Education Canada Inc.
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Marketing: Real People, Real Decisions
Core and Augmented Services
• Core service: the basic benefit of having a service performed. It
helps to remember what it is that consumers are really paying for, to
avoid making mistakes in delivering that service.
• People buy legal services to keep
themselves out of trouble or to
avoid losing money, not always
successfully.
• People buy insurance for the
peace of mind associated with
being protected from loss.
• Augmented services: the
core service plus additional
services provided to enhance
value.
©Copyright 2003 Pearson Education Canada Inc.
Figure 11.2
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Marketing: Real People, Real Decisions
Providing Quality Service
• The evaluative dimensions of service quality that consumers use
to decide if the service received met or exceeded their expectations are:
• Search qualities: qualities that can
be perceived before buying by sight,
touch, or hearing
• Experience qualities: qualities in a
product that can be perceived after
buying by senses such as taste.
• Credence qualities: qualities in a
product that a purchaser believes exist
but that are not subject to objective
proof.
• Such as the quality of the gall bladder
operation you just had.
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Marketing: Real People, Real Decisions
Measuring Service Quality
• Gap analysis: a marketing research methodology that measures
the difference between a customer's expectation of a service quality
and what actually occurred.
• Critical incident
technique: a method
for measuring service
quality in which
marketers use customer
complaints to identify
critical incidents,
specific face-to-face
contacts between
consumers and service
providers that cause
problems and lead to
dissatisfaction.
©Copyright 2003 Pearson Education Canada Inc.
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Marketing: Real People, Real Decisions
Delivering Service Quality
• Internal marketing: marketing activities aimed at employees to
inform them about the firm’s offerings and their high quality.
• The service profit chain is an idea that service company
profits (and success) are dependent upon both employee and
customer satisfaction, due to the inseparability of the customer
from the service provider.
• The chain works like this:
– Healthy service profits and growth come from satisfied and
loyal customers who have received,
– greater service value, from
– satisfied and productive service employees, due to internal
service quality, such as selection, training, support, and a
good working environment.
• Any weak link in this chain will cause less than optimal
performance.
©Copyright 2003 Pearson Education Canada Inc.
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Marketing: Real People, Real Decisions
Developing and Managing Services
• Services as theatre is an approach that likens the service
experience to a theatre performance, which distinguishes between the
back stage, where the service is created, and the front stage,
where the service is actually delivered.
• Targeting actions that a service provider might
take:
– audience maintenance to retain present customers
– audience enrichment to add value to the service
experience
– audience expansion to increase the size of the
regular customer base
– audience development to add new customers of
the service to its base
• Service providers will use the same segmentation and
growth strategies used by goods producers.
©Copyright 2003 Pearson Education Canada Inc.
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Marketing: Real People, Real Decisions
Developing and Managing Services
• Five dimensions to successfully position a services are:
• Physical evidence: a visible signal that
communicates not only a products quality
but also the product’s desired market
position to the consumer.
• Branding strategy: using branding to
create a unique identity for the company.
• Responsiveness: the speed and care in
which a provider delivers the service.
• Empathy: the ability to understand the
customers’ needs better than the
competition.
• Assurance: emphasizing the knowledge
and competence levels of employees.
©Copyright 2003 Pearson Education Canada Inc.
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Marketing: Real People, Real Decisions
Famous Last Words…
• The marketing of
intangibles is both similar to
and different from the
marketing of goods.
• The trick is knowing which
from which.
©Copyright 2003 Pearson Education Canada Inc.
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