Dimensions of Service Marketing
‘Spectrum’ – Research & Consultancy Group

The Four Unique Characteristics of Service Marketing

Here we have tried to look at the four primary characteristics that set services apart from products: intangibility, perishability, simultaneity, and heterogeneity: and try to see how they function and affect the Television Broadcasting Business.

Intangibility

• Let us first consider some issues that are considered to be true for most services:

• Services cannot be touched, seen, tasted, heard, felt

• Services cannot always be displayed, demonstrated, illustrated

• Services cannot be experienced prior to purchase

• Services creates reliance on tangible cues

• Environment, atmosphere of facility

• Services put up a major challenge before marketers that of ‘communicating the nature & quality’ of the service

While products are mainly made up of tangible parts, services have a high percentage of intangibles. Much of what someone buys from advertising agencies, accounting firms, management consultants, lawyers, educational institutions, travel agents, and others cannot be seen, felt, heard, touched, or smelled. Often, what is obtained goes out of existence at the moment it is purchased.

Product - Service Continuum

The abstract nature of services makes them difficult to describe and understand. This, in turn, makes them hard to differentiate, illustrate, and promote. The "iceberg principle" is especially relevant. This states that customers and prospects base their pre-purchase judgments on a number of incomplete clues - that certain tangible elements can be evaluated. These clues include people, facilities, computers, and other capabilities. Recognizing the importance of tangibility, some companies have added product-like components to their service mix. It's also why, in large part, some services retain obsolete tangible elements. For example, airlines still give passengers tickets despite the near universal availability and widespread uses of automation. Additionally, the wise company relies on external communications to raise the height of its iceberg. By so doing, many of the problems of intangibility can be alleviated. Focusing on what is perceptible - or developing new perceptions - helps make the service "real."

Theodore Levitt's concepts on "the industrialization of service" look at ways in which companies use hard, soft, and hybrid technologies to make services product-like. By doing so, a firm not only increases tangibility but also creates new efficiencies, lowers costs, and improves customer satisfaction.

Somewhat related to Levitt's concepts, Shaw uses what he calls the "Client/ Customer Service Spectrum" to show how services range from intangible to product-like. Highly sophisticated pure services are at one end of the spectrum (example given: executive financial counseling). Here, the user is a "client" rather than a "customer." In the middle, there's a hybrid that represents something between pure service and product (example given: individual advisor services performed by financial intermediaries). At the other end of the spectrum, the service becomes more standardized. It nearly becomes a product that provides generic solutions to routine requirements (example given: discount brokerage firms and retail banks). The user is a "customer" rather than a "client."

In discussing product/service hybrids, Regis McKenna goes so far as to say, "Product and service marketing, formerly two distinct fields, have become a single hybrid."

This reflects:

     I. that service marketers are working to gain the benefits of making the intangible more tangible, and
    II. that product marketers are working to gain the benefits of augmentation through strong service support.

Communicators must find components of tangibility in the firm's service mix and use them whenever possible. Intangibles must be made as real as possible with hard benefits, not features, dominating every message. Testimonials are especially useful in helping to increase the buyer's or prospect's faith in the service provider.

Product marketing tends to give first emphasis to creating abstract associations. Service marketing, on the other hand, should be focused on enhancing and differentiating "realities" through manipulation of tangible clues. The management of evidence comes first for service marketers.

Insurance companies use imagery, such as hands, an umbrella, a rock, a blanket, the cavalry, and "good neighbor" approaches to put forth tangible clues to their audiences.

Let us see how relevant these generally accepted statements are for Television Broadcasting Industry.

There are various differences when we compare pure services and television broadcast. Television Broadcast has a dominant intangible component and a very minor tangible is involved. The service can be seen, unlike many other services.

Broadcast can even be experienced before actual purchase in the form of temporary feeds from broadcasting stations or can be experienced even at a place, which has already subscribed to these services.

The service benefits last a long time after the service has been purchased. A one-time payment, as is the case in most cable operators in India, would guarantee the consumer service for at least one-month. The service needs to be renewed every month.

The benefits though depend completely on the type of channel that is being viewed. An entertainment channel the benefits usually last only until the consumer is viewing the channel, after which a normal consumer usually forgets about the program. On the other hand, a business news channel gives the consumer enough insights to base some of their business decisions on them. The effects of which can last much after the customer has stopped viewing the channel.

The tangibles involved in this kind of service can be the program guides, which give the consumer information about the various types and schedules of programs that are to be run on the channels.

Communicating information about a particular channel to consumers is not very difficult. The best way to do this is by giving out advertisements in channels that consumers already subscribed to or on those channel which are free to all. Communication through other channels (print media, billboards, etc) is usually not that effective. The channel can buy air time in other channels, like is currently being done by Discovery Channel, to give the consumers a glimpse of the choice of programs that would be available to him/ her if he/ she wishes to subscribe

Another feature that makes broadcasting different from other services is that it is easy to differentiate your product. Though in this industry replication by competitors of the programs that are running on one channel is rampant but the kind of image that is created in the minds of the consumer is very difficult to imitate and requires a lot of effort, resources and time to change.

According to Shaw’s classification of services, broadcasting is a more standardized kind of a service. It nearly becomes a product that provides generic solutions to routine requirements (entertainment and information). The user is usually referred to as a ‘viewer’ rather than a ‘customer’ or a ‘client’.

Channels use imageries, like their logos and people behaving in a certain manner that put forth tangible clues to their customers.

Perishability

Service generally cannot be stored, warehoused or inventoried and unused capacity cannot be stored & saved. Supply & demand are often uneven and tend to vary. There is seasonal, weekly and hourly fluctuation in demand as well as supply.

On one hand, unused or excess capacity is lost forever. On the other, being unable to meet demand results in lost revenue.

Also consider that many services go out of existence at the point of creation. They are produced "on demand" which places a considerable strain on providers. You cannot store them. Refunds may be impossible or irrelevant.

Also, all parts of the service operation must work in harmony. For instance, the hotel with an inadequate reservations system will face all kinds of problems even with the right number of rooms and a well-trained lobby staff.

The concerns surrounding perishability stay in the background when demand and supply are in balance. Few firms, though, are able to walk this thin line with ease.

In trying to achieve balance, there's a temptation to "chase demand" especially since most service firms are labor intensive with high semi-variable and fixed costs. After losing an account, a large advertising agency may be tempted to go after some small clients. Such business will likely be unprofitable and a further drain on resources.

Better approaches involve "influencing" demand and supply. W. Earl Sasser listed several ways that service providers can create balance.

Demand can be modified in ways such as:

• offering lower rates in off-peak periods

• cultivating customers to fill capacity during non-peak times

• providing complimentary services to reduce the negative impact of waiting time (when all available capacity has been used)

• putting reservation systems in place

Supply can be influenced through:

• the use of part-time employees

• peak-time efficiency routines (the agency that subcontracts overload work, for example)

• increased customer participation

• developing distribution strategies to help shift demand to available capacities (the drive-in window at the fast food restaurant, automated tellers at the bank, or an agency adding a subsidiary, to handle project work)

• adding space.

Often, communications strategies focus on helping to balance supply and demand. Various kinds of promotions are especially useful. One example is a restaurant offering "two-for-one" dinner prices Monday through Thursday.

The situation in a broadcasting channel is different for this service characteristic as well. Here perishability can be used to Identify factors such as airtime-or advertising time that if lost cannot be recovered by the channel.

Advertising is a crucial revenue generator for most of the channels that are beamed into India. The laws here, unlike in the west, allow even paid channels to air advertisements and charge for the same.

In order to keep the demand and supply of advertising time in balance the channels usually resort to differential pricing of advertising time depending upon the time or the programs that are being offered at a particular time. Demand and thus charges are usually higher at primetime, when viewership is highest and drops down or is even zero at certain times.

Perishability in case of viewers is less of a concern. Though viewership is a major concern and usually determines the revenues that a channel is able to generate through advertising etc. The revenues that are generated by subscription are available to the channel irrespective of whether the customer actually views the service/ program when it is aired. Perishability can be thought to make some sense in case we take into consideration the number of subscriptions. Irrespective of how many subscriptions a channel is able to generate, the programs have to be broadcast and in a sense perishes for the potential viewers who are either not aware of the channel or do not subscribe because of any other reason.

Simultaneity and Heterogeneity

These two factors comprise the "quality connection" in service firms.

Simultaneity means that services, typically, are first purchased then produced and consumed at the same time. Service providers are often in close proximity to customers. Goods, on the other hand, move sequentially through production, purchase, and consumption. There may be little or no contact between buyers and the product manufacturer.

In case of television broadcasts, the viewer first pays the channel (usually before the first ten days of the month) and then the service is provided to him/ her. Though here again the difference is that the service provider does not have to be in the proximity of the consumer; technology bridges the gap between the two.

Heterogeneity refers to the reality that service output varies from one company to another, from one performer to another in the same company, and from one occasion to another with the same performer. Add to this the direct involvement of individual customers. Because each user provides his or her own level of skill, understanding, and cooperation to the process, it's easy to see why the service process can so easily get out of control. The output of goods, on the other hand, is far more consistent with only a few people typically involved.

In the case of television channels, as we would see later, the output/ programs vary considerably from one channel to another. Also programs within the same channel differ depending upon whom they target; and even programs directed at the same consumers at almost the same time differ because of differences in the individual teams that are involved in the production of each program.

Because so much depends on different parameters - and since individual performances are uneven - managing the quality process may very well be the key success factor for a channel.

The CEO of a leading south-Asia based television-broadcasting company said: "Quality is the only patent protection we've got."

Studies have shown that quality is one of the most important factors affecting a television channel’s performance. It's the key to gaining high levels of ‘viewer loyalty' generating more advertisement revenue, lowering vulnerability to price wars, commanding higher monthly charge without losing volume, and lowering marketing costs. One executive bluntly stated: "High quality service is the best marketing device ever created, and mediocre service is the surest way to deserved oblivion." In television channels as is true for most services, there is no price low enough to justify poor quality.

Consistency in performance is the desired result of quality programs. Still, creative marketers can make deliberate use of "output heterogeneity." One example is that most big television networks have more than one channel usually coming at a bundle price - thus catering to a bigger market at the same time.

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By: ‘Spectrum’ – Research & Consultancy Group
(Team: Ashish, Deepak, Lalit, Mohit, Pankaj)
MBA (IB), II Year Students
Indian Institute of Foreign Trade, New Delhi
Email: spectrum_iift@yahoo.com

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