Creating tangible service products for success


By

Prof. R.K. Gupta
(BE Mech Hons, MBA FIE)
Sr. Consultant & Professor of Management
Aravali Institute of Management
Jodhpur
E-mail:
rkgupta@rkgupta.in / cityju@rediffmail.com
 


Services now constitute almost 58 % of India's GDP and are likely to move to USA's figures, since Indians have basic liking for services sector (but with poor customer care and attitude) in preference to manufacturing that China has shown penchant about. But as quality of life improves, education spreads and incomes rise, the household expenditure pattern becomes more services expenditure oriented with diminishing share of food and other basic necessities. It is estimated by me that for middle class of India the food and basics share in expenditure will dip to 20% in near future with services and value added service staking almost 60% share of expenditure.

There is some problem, however in marketing of services that Indians are plagued with:

1. Quick profit approach of Indian businessmen
2. Lack of professionalism and commitment to quality
3 Poor law enforcement and consumer protection
4. Low level of technology use in services
5. Usual delays and lack of communication between services providers and customers
6. Relaxing service process standards and less use of tangible components (example food and transport in airlines)

The MNCs that have come to India with experience of world class service delivery experience feel the pinch of right service attitude and lack of commitment in Indian employees, resulting that there is hardly any difference between a world class service provider in India and local companies. Casual approach and routine cynical approach of Indian employees is major obstacle.

Service is generally defined as a benefit, comfort, convenience or an experience that serves latent or visual need of a customer. For this service equipment and facilities are used.

But one thing is very clear service products are largely intangible and can only be felt as an outcome but can't be seen or touched or judged. Customers remain apprehensive about service product and its outcome till they undergo service consumption and also about its legitimate price as value addition is uncertain due to intangibility.

Many services are critical and even life saving or profusely affect career of customer.

The importance of tangibilising service thus can't be overemphasized. When a customer writes a cheque for service purchase, he or she feels apprehension as nothing is received in return which can be seen or touched or felt and customer feels empty handed. For example take Life insurance, every one knows that basic insurance product is 'Term policy' for pure life risk, but still people prefer money back type schemes that invest a good part of premium charged in various market instruments and thus more than policy face value is returned at end of contract period . This is one example of tangibilizing the service or its benefits. Same way a set of notes, articles and books given to a student makes the teaching service a bit tangible. In restaurant of course tangible part is more prominent as the food is very much a tangible component but makes only 1/3 part of actual price charged. Good service facilities like a well appointed and new aircraft for flying and young and efficient air hostesses do contribute to making air transport service tangible to some extent along with good quality steaming food served on board.

"This (service) is an emotional response. Many of us tend to be visual and concrete, especially when spending money. We like to see and feel what we paid for. Even if the intangible thing we bought was a smart purchase, it still helps if we have a visual reminder of where the money went." Writes Kevin Stirtz; in ' Sell More by Making Your Service Tangible'.

This should not be confused with personalizing of service experience which is another important parameter for service marketing.

With almost 180 type of services already classified by UN and WTO and more new types of services cropping up in whole variety of sectors, it is difficult to standardize the approach for tangibilising process and service delivery processes. The services can be as personal as of a hair dresser with limited scope for automation to substitutable, progressive and finally explosive services like telecommunication systems.

A lawyer or a management teacher, who writes articles and books is basically creating not only a brand for self but also tangibilising his or her services. Edward Poll states so in his article 'Productizing your Practice'. Simply defined, "productizing" means creating tangible items or products based on the service that you are already providing and using them to help the whole practice grow.

The answer is to "productize" your service.

Make it tangible. Think like a product manager. Here are four different techniques you can use to package your service to act more like a product :( By Susan LaPlante-Dube)

    1. Turn your service into a product.
    2. Package your different service levels.

For instance, let's say you sell cars and offer pre-paid maintenance plans. Then you might create a high-end package that includes:

  • Picking up the car for service
  • Providing a loaner car for the day (many electricians fixers do this type)
  • Changing the oil
  • Changing the wipers
  • Washing the car and cleaning the interior
  • Checking hoses, pumps and other moving parts

And then a lower-end, prepaid package that includes:

  • A reminder phone call for service
  • An oil change
  • Wiper blade adjustment

Each of these packages caters to a different segment of your market but gives your clients a choice. When you package service levels, you typically would want to create three product offerings. Often, you'll see these presented as gold, silver and bronze levels (but please, be more creative!).

Begin the process by:

  • Looking at what your competition is offering,
  • Documenting the value you deliver to a client,
  • Talking to customers to assess their needs, expectations and priorities, and
  • Creating logical groups of offerings.

Two important points to consider when it comes to creating service packages: These are not options in the quality of service you offer nor are they just price adjustments to the same service. These levels are differences in the actual deliverables and the total value.

Additional examples of service packages include customer support services for software or hardware products and consulting services for a large business vs. a small one.

    3. Combine your services and create a new offering.
    4. Package your process.

When it seems impossible to package what you deliver, differentiate your company and increase your perceived value by packaging how you deliver

For instance, if you run a web design firm, you'll want to document your end-to-end design capabilities and your development process. And if you run a networking or software company, you'll want to package the implementation and rollout process.

This approach shows prospective customers you know what you're doing and you follow a logical approach, and it shows where they're involved. It also increases the perception that you're established, professional and capable.

What all these techniques have in common is the opportunity for you to present all the value you deliver. Often, we make assumptions that our customers understand everything we do for them. But this just isn't the case: You need to pull out every piece of value you provide over the course of a project and present that to the client in order for them to completely understand what a terrific job you're doing for them.

A documentary prepared by an institute, like say Manipal Medical college or MDI Gurgaon is another example of taking customer through live experience in service facility to make them understand what is in for them as a service experience, facilities and benefits or outcome.

Tangible Marketing messages:

Here are a few examples of how common jargon might be translated into tangible descriptions that will help communicate to the marketplace: (Services Marketing: Do You Tangibilize? By Mike Schultz and John Doerr: Wellesley Hills Group

Marketing Message
We offer efficient and effective customer and business needs-focused IT and networking solutions.

More Tangible

    • We fix complex and difficult computer problems well
    • We keep your networks up 24/7 so your people can work all day and not lose productive time
    • We cost less than a full time staff person and we never call in sick
    • We keep up with the latest technology and explain it in terms that both the COO and the IT staff can understand and evaluate

Marketing Message

HR solutions to help you attract, retain, and develop your key staff.

More Tangible

    • We deliver classroom and e-learning based management and leadership development seminars
    • Our payroll service gets your employees' paychecks right all the time, on time.
    • Our employee 401k plan comes with free financial planning from certified financial planners

Marketing Message

Innovative, efficient and reliable logistics and supply chain solutions.

More Tangible

    • We deliver 99.9999% of our overnight packages on-time - as rated by an independent 3rd party
    • We've saved our consulting customers an average of 8.3% of their annual freight bills by reorganizing their supply lines
    • We ship raw materials from their source to your manufacturing facilities on our established rail and truck routes

Getting Tangible Results

When crafting your marketing messages and campaigns for services, you usually only have a few seconds to grab your clients' and prospects' attention. Most readers quit reading if they are forced to sift through paragraphs of bloated marketing-speak before they get to what you really do. So focus on communicating the simple and familiar tangible aspects of your services...and communicate them fast.

Once you can articulate the tangible aspects of your services you can better promote them, control service delivery quality, and set prices.

Giving coffee mugs, memoirs and mementos by hotels or resorts, giving prize money to topper student of a coaching school are some examples of attempt to tangibilise the service products and augment benefits.

Problems in Web Marketing:

The benefit of buying from a retail store and in person is surely the ability to inspect products, let alone the ability to meet the people with whom one is doing business. Rapport can be easily developed when meeting clients face-to-face and products can also undergo their close scrutiny and even physical demo. But on the web, e-commerce changes all that. Those abilities have disappeared.

So one of the Internet marketer's greatest tasks is to market a product online in such a way that people can simply and easily buy it with the mere information they receive -- which in many cases is not a whole lot. More important, that task is multiplied since a marketer must also develop a certain level of trust (my experience with Indian online dealers and that with US based e-shops like amazon.com are vastly different) with their customers. Merchant fraud, from spam to scams, is just as common as consumer fraud. Building trust online is critical (in ' How to Make the Intangible Tangible' by Michel Fortin)

Amazon.com and ebay.com are two examples where pictures, guarantee and live chat with market operators attempt to create tangibility and make up for online impersonal selling. Some software applications developed by authors can be downloaded in full or limited version for certain fixed period of time for prospective client to experience its working, format and features thus inspiring confidence and final buy decision. FAQs pages are also great tool of sales. Offering an FAQ offers three important benefits. 1) It helps to allay any concerns the customer may have about your product. 2) It may answer questions that a customer may not have at that time, which helps to strengthen the sale and reduce post-purchase remorse (what psychologists call "cognitive dissonance"). And 3) it reduces the greatest killer of sales

In industrial services for example inviting potential customer to premises of the service provider definitely helps to tangibilise the service. A well designed brochure for example may just eliminate need for sales visit. Video of service process going on is great aid in tangibilising service product.

Another example is of a market research consultant working with corporate clients at say Rs 1500 per hour, he could instead provide a "Market Position Blueprint" for a flat fee of Rs 50,000. The package would include a comparison matrix of three key competitors, qualitative data from interviews with six loyal customers, and recommendations for improving the client's market position, all to be delivered with 30 days. Clients thus know in advance exactly what they are paying and what they will get for it.

When buying services in a package, the client runs less risk. They don't have to worry about cost overruns or getting an unexpected result. They know how soon the result they are paying for will be delivered. There's also an emotional comfort factor in buying a package. Purchasing something with a name attached makes it feel much more tangible than simply buying hours.

Problems of Branding

In general, consumers feel markedly less positive about service brands than they do about consumer goods brands. The prime measures of a brand are its levels of differentiation, relevance, esteem and knowledge amongst the public.

A study in the US aimed at these measures for 1407 product-based brands from juices to motor oils, and compared them with 300 service-based brands.

Services are weaker on all four measures, but are particularly weak on differentiation.

This is crucial; a high level of differentiation is the vital first step to building a strong brand. Without it, brands cannot signal to their prospects that they offer something different from the status quo and attract new custom; without differentiation, they are going nowhere

A service is a performance. It is a series of actions that bring value to the customer. Customers have the choice of performing the service themselves (competing with service provider)—being their own doctor, preparing their tax returns, selling their home—or hiring someone to perform the service. Service providers who bring expertise, care and integrity to their performance create a valuable service and give customers less reason to perform the service themselves—or to shop around for an alternative supplier. For example, Real estate transactions are inherently risky for customers. Considerable money is involved in the transaction; the customer frequently is inexperienced in real estate matters and usually lives with the consequences of the transaction for a long time. Thus, real estate agents and brokers who perform well for their clients and instill confidence create strong client loyalties and benefit from favorable word-of-mouth communications

We thus can see that special focus is needed in service marketing for productizing, clear communication, adding tangibility and developing credibility factor for successful branding. The extra 4 Ps have to be given due importance.

Acknowledgements:

The text used from various places on internet based articles has been duly cited at respective places. The article is an attempt to document professional experience and observations of author and to direct focus on important aspect of tangibilising and branding needs in fast growing service sector that is in formation stage and poorly managed in India.
 


Prof. R.K. Gupta
(BE Mech Hons, MBA FIE)
Sr. Consultant & Professor of Management
Aravali Institute of Management
Jodhpur
E-mail:
rkgupta@rkgupta.in / cityju@rediffmail.com
 

Source: E-mail August 4, 2007

         

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