The services sector in Asia is growing at a rapid clip. Even many businesses that sell products are introducing services for consistent revenue. While the global economy thrived on manufacturing and products in the last century, it is now dependent on services. In this article we shall explain the concept of service marketing.
Marketing a service to consumers or other businesses is completely different from marketing a product.
4 hurdles to promoting your service business
Any business that sells a service — IT, entertainment, education, healthcare, tourism — faces four challenges in promoting itself.
Services are intangible
The provider is the product
Quality can vary from day to day
According to International Monetary Fund (IMF) statistics, ASEAN’s gross domestic product (GDP) was about 3.08 trillion US dollars (S$4 trillion) in 2020. Currently, the ASEAN economy is growing at an average annual rate of 5.2%. It is estimated that by 2030, ASEAN’s GDP will hit 6.6 trillion US dollars, becoming the world’s fourth largest economy after the United States, China and the European Union.
Amongst this growth, many services-led industries have great potential for growth and business opportunities in Southeast Asia.
Some of the service-led industries in this region are:
- Information technology (IT)
- Telecom, travel and tourism
- Media and entertainment
As more businesses turn towards services, they face new challenges on the marketing front. Learn from highly successful service businesses how to conquer each of them.
What makes service marketing different
The challenges of marketing services are different from the challenges of marketing products. By understanding the differences, service businesses can more effectively promote themselves.
1. Services are intangible
It is easier to sell a product than a service because a product is tangible or physical.
When customers can see a product and examine its shape, colour, features, size and the quality of materials used, they can immediately make a purchase decision. Consumers in Asia like to ‘feel’ the product before they buy — especially if it is clothing.
How does one sell something that cannot be shown to or owned by customers?
However, a service is intangible. Consumers cannot feel or own it like a product. So it takes longer to convince them.
Take tourism for instance. That industry sells experiences. The only way a customer can preview the “product” is by seeing photographs, reading reviews online or by listening to other people who have travelled to those destinations.
Education is also a service. The various utilities you consume — electricity, gas, telecom, internet — are all services as well. Apart from pricing, customers choose a service provider based on quality of service.
There are special approaches to overcome the challenge of selling a service. One is customer testimonials. You can take written testimonials from your existing customers and put these, along with each customer’s photo, on your business website, in your shop and in your brochures.
Customer reviews on established websites such as Yelp, Google and TripAdvisor also work well. Also enable social media ratings on networks that attract followers who are your potential customers.
2. The provider is the product
A product can be bought from different channels: online, in a mall, in a convenience store, etc.
But a service has one point of purchase. The buyer deals directly with the service provider or his distributor. And they go to that same point every time they need that service.
For example, when you need a haircut, it’s highly likely that you go to the same salon every month. You may go a step further and demand that the same person does your hair (because he/she knows your preferred style). Hence the relationship between the service and the service provider is inseparable.
How can one service provider offer customised service for thousands of customers?
When you are dealing with a few customers, it is possible to get to know them well. You will know their preferences and their level of satisfaction with your services. But that may not be possible when there are dozens — or hundreds or thousands — of customers.
The answer is systems and processes. The Marriott Group of hotels, for instance, records customers’ preferences in a master database that is accessible to any hotel in the Marriott chain, anywhere in the world. So when you make a reservation, they already know you, and set your room up accordingly! And their customers love that.
By using a customer relationship management system, you can keep track of the preferences of each customer. This will allow you to deliver highly customized service every time. Just don’t overdo it, as companies that know too much can spook customers.
3. They’re perishable
Like some products — food items for instance — services are perishable. There’s only so much time in a work day. The service provider needs to sell maximum capacity in order to be profitable. Unfortunately, there won’t ever be a steady queue of customers waiting to be served one after another.
How can service providers create a steady demand for their services?
Let’s take the example of an airline. If a flight is going half empty, the revenue collected from ticket prices will not suffice to cover the operational costs. So airlines use different strategies to fill their airplanes. They might club flights for a particular route or use code-sharing arrangements with partner airlines or join an airline alliance like Star Alliance.
So it is a matter of balancing demand with supply. If you can do that, then you minimise your business losses and increase your profitability. There are periods of demand (like the holiday season) and then there are periods when sales dip due to low demand.
There are a couple of marketing strategies to counter periods where there is less demand:
- Aggressive promotion, including email marketing.
- Discounts and sales during low-demand periods.
- Loyalty programs with points.
Savvy marketers can create a sense of false urgency and false demand, causing people to rush out to buy services. They do this by offering discounted pricing for a limited period.
4. Quality can vary from day to day
A product might have little variability, because every unit of that particular model is built to an exact specification or design created by a manufacturer.
How can a service be standardised so that the customer gets the same quality, every time?
But with a service, there is a lot of variability. There will be variations depending on who offers the service, and at what location, how busy that day’s service schedule is and other factors.
This can be achieved through standard processes and frequent audits. By training yourself and your employees to adhere to the same process every time, you can achieve a higher overall level of service.
Use customer surveys and feedback to find out where/when/under what circumstances the greatest variation in service quality occurs. Frequent improvements, in response to customer feedback, can lead to increased customer satisfaction.
The secret sauce: emotion
The most successful service marketing creates an ‘emotional bond’ with customers.
The “Malaysia, Truly Asia” is a great example of service marketing using emotion. The government of Malaysia initiated this worldwide marketing campaign in 1999 to promote tourism in Malaysia, which was successful and brought in millions of tourists.
The campaign, which continues today, portrays Malaysia as an attractive tourist destination by positioning Malaysia as a country that is representative of the best that Asia has to offer. On top of that, it also showcases various aspects of the multifaceted culture in Malaysia. The campaign is conducted globally and receives appreciation from tourism industry observers and travellers alike.
Make service marketing work for you
We have seen that the challenges presented by service marketing are quite different from product marketing. Unlike products, services are intangible, there’s no difference between the provider and the product, they’re perishable and the quality can vary from day to day.
It is more difficult to sell something one can’t own or see.
The key to solving these four challenges starts with good systems and processes that allow you to standardize your service and record customer preferences. Pay attention to customer feedback, online reviews and conversations on social media. And act quickly to remedy and shortcomings.
The main thing for you, as a service marketer, is customer satisfaction, and then profitability.
If the customers are happy, they will tell others about your service.
And the profits will come!