Everything you need to know about the classification of service marketing. Service Marketing can be classified according to the market to which they are offered- (1) Services sold in the consumer market, (2) Services sold in the business market.
Please note that we have many services common to both market, e.g., financial, insurance, transport and communication services.
Various attempts have been made for classification of service marketing of which some as guides with diversity of firms in the service sector.
Five schemes bases presented to classify services in ways that provide strategic insights for allowing firms to outperform in competition. Noted marketing author Christopher Lovelock, provides following classification schemes.
Learn about the classification of service marketing:-
A. Consumer Service Marketing – 1. Food Service 2. Hotels and Motel 3. Personal Care Services 4. Medical and Surgical Services 5. Educational Services 6. Household Services 7. Automobile Services 8. Entertainment Services 9. Transport Services 10. Communication Services 11. Insurance Services 12. Financial Services 13. Personal Security Services.
B. Industrial Service Marketing – 1. Engineering Services 2. Warehouse Services 3. Advertising and Promotional Services 4. Office Services 5. Management Consultancy Services 6. Marketing Research Services 7. Manpower Selection and Training.
Additionally, also learn about the other classifications of service marketing:-
A. On the Basis of Degree of Involvement of the Customer – 1. People Processing 2. Possession Processing 3. Mental Stimulus Processing 4. Information Processing
B. On the Basis of Service Tangibility – 1. Highly Tangible 2. Services Linked to Tangible Goods 3. Tangible Goods Linked to Services 4. Highly Intangible
C. On the Basis of Skills and Expertise Required – 1. Professional Service Marketing 2. Non-Professional Service Marketing
D. On the Basis of the Business Orientation of the Service Provider – 1. Commercial Organisation 2. Non-Profit Organisation
E. On the Basis of the Types of End Users – 1. Consumer Service Marketing 2. Business to Business Service Marketing 3. Industrial Service Marketing.
Classification of Service Marketing: Customer Service Marketing and Industrial Service Marketing
Classification of Service Marketing – On the Basis of Degree of Involvement of the Customer, Service Tangibility, Skills and Expertise Required, and a Few Others
We shall now distinguish between the various types or classes of services. Different types of services need different marketing strategies.
I. On the Basis of Degree of Involvement of the Customer:
This category is based on the degree of involvement of the customer.
1. People Processing- The customer has to be present at the place of delivery to experience or consume the service, like a training workshop, a dance class, health care, etc.
2. Possession Processing- Even if the customer’s presence is not required, his possession or property needs to be deposited for service, like car servicing/repair, TV/VCD repair, laundry, courier service, etc.
3. Mental Stimulus Processing- In this case the customer’s mental attention is required, if not physical presence, in order to experience services like career counselling, advertising, consultation and education services, etc.
4. Information Processing- In this case, data, information, knowledge are gathered and analysed for clients, like research studies, market surveys, data processing, accounting, legal services, programming, etc.
II. On the Basis of Service Tangibility:
Here the degree of tangibility (the tangibility spectrum) has been taken into consideration with the same number of classes.
1. Highly Tangible- The service includes physical products (highly tangible) for use during the contract period, like a cell phone or a house on rent.
2. Services Linked to Tangible Goods- These are the guarantee or warranty periods, during which the sellers provide free or subsidised services to the customer, like machines, vehicles, gadgets, etc.
3. Tangible Goods Linked to Services- Here some physical goods are given to the customer as part of a service, like food with a train/air ticket, hotel accommodation which includes morning breakfast, etc.
4. Highly Intangible- Here, no products are offered as part of the services, like haircuts, body massage, movie, etc.
III. On the Basis of Skills and Expertise Required:
The basis of the level of skills required to render a set of services, as-
1. Professional (High Skill) Service Marketing – These services require a higher level of qualification and training to provide services, like doctors, lawyers, pilots, IT professionals, etc.
2. Non-Professional (Low Skill) Service Marketing – These services don’t require any special prerequisites in skills, and can be performed by anybody with some practice, like office security guards, babysitters, courier delivery boys, etc.
IV. On the Basis of the Business Orientation of the Service Provider:
This kind of service marketing depends on the business style or orientation (objective, purpose, aim) of the organisation, as-
1. Commercial Organisations (Profit Oriented) – The main objective here is to make a profit by providing service. They strive to do all that is required to earn profits by keeping the customers satisfied.
2. Non-profit Organisations (Service Oriented) – The main objective here is to serve the target clientele, without any motive to earn any profit. Of course money is needed for running such an organisation, and that is obtained from public donations, trust funds, or government aid. This category includes government bodies and also no-profit-no-loss (cost to cost) organisations. Schools, NGOs, welfare societies, disaster relief organisations, etc. are examples.
V. On the Basis of the Types of End Users:
Service marketing can be classified by the type of consumers who consume them.
1. Consumer Service Marketing (B2C) – This is between the service provider (the company) and the individual customer for his personal consumption like medical treatment, fitness services.
2. Business to Business Service Marketing (B2B) – This is between two companies, like one company hiring another, to do market research for it.
3. Industrial Service Marketing – This is the case where a manufacturing company buys services from a service provider like supply, erection, commissioning, and maintenance of the plant and machinery.
Classification of Service Marketing – 2 Major Classification: Consumer Service Marketing and Industrial Service Marketing
Service Marketing can be classified according to the market to which they are offered- (1) Services sold in the consumer market, (2) Services sold in the business market. Please note that we have many services common to both market, e.g., financial, insurance, transport and communication services.
1. Consumer Service Marketing:
In the modern society, we come across many types of services sold to the consumer.
We will describe briefly most important services:
a. Food Services:
Restaurants, cafeterias and hotels are offering food services to numerous individuals and families who have firmly developed the habit of eating out. Small eating places offer simple and cheaper meals. Five Star hotels offer elegant and costly food but with superb services and royal comforts.
Increasing tourism has also boosted the development of hotel industry. Then, we have also caterers who specialise in supplying food and service for dinners and parties at our residences on ceremonial occasions.
McDonald’s follow modern scientific methods of production and marketing in supplying food products to millions of people. Their customer services are planned, controlled, automated, audited for quality control and regularly reviewed for performance improvement and customer reaction.
b. Hotels and Motels:
Lakhs of people every day use lodging and boarding services all over the country. Tourism is growing and hotels and motels are growing in numbers every year. Modern hotels provide luxurious life to travellers and tourist population. Tourism is now considered a source of foreign exchange in all countries. Modern hotels provide numerous amenities, comforts and refined services.
A Five Star hotel is fully air-conditioned. It has air-conditioned rooms with four-channel music, complimentary cold drink, a fridge, a TV set, a telephone in the bath-room, wall-to- wall carpet, luxurious beds, a 24-hour room-service, a 24-hour coffee shop, a swimming pool, a health club, comfortable shopping arcade, a beauty parlour, and so on.
For such luxury and life-style of a king/queen, you pay anything from Rs.5,000 to Rs.10,000 a day or even more. ‘Image’ and ‘Atmosphere’ – two magic words – mean a great deal in a super- deluxe hotel where the difference between appearance and reality is less than paper-thin.
Much money and manpower may have been involved to create the image of service (Right Sir, I am at your service, Sir) with a sweet smile, image of quality and an atmosphere of delicious wealth. A customer is willing to pay Rs.50 for a soft drink and Rs.30 for a papad, because he knows that he is paying for the extraordinary services associated with products.
Hotel industry is thriving only on the customer services and satisfaction. Each customer is regarded as a VIP and there is a firm belief that the guest is always right. Customer delight is given top priority.
c. Personal Care Services:
Rising standards of living brought about development in the personal care services (helping a customer to be well groomed). These services are offered by health and fitness centres, beauty parlours, barber shops, laundries, dry cleaners, garment repair shops, shoe-repair shops, and so on.
Health and fitness organisations are growing in importance and popularity in all countries due to ever-increasing demand for improving individual personality and efficiency. In the anti-fat modern culture and life-style, figure- consciousness and weight-reduction (due to fatness) have assumed unique importance. People have money and are prepared to spend money on themselves.
d. Car Service Firms (Garages):
Lakhs of car owners are dependent on car service organisations. Petrol pumps sell both goods and services. They are now called service stations for mechanical road transport. There are also numerous garages and repair shops specialising in repairs and maintenance for cars, trucks, motor cycles and scooters.
e. Entertainment Services:
Rising purchasing power and more leisure time are responsible for the steady growth of entertainment services. Movies, sports, amusement parks, circuses, car racing, cricket, billiards, music, dancing and drama are such popular forms of organised entertainment today.
f. Transport Services:
Railways, buses, ships, and aeroplane provide transport services for moving people and goods. Fastest growth has taken place in air transport. A person can have round-the-world trip just in one fortnight. Air transport has become very popular in international tourism.
g. Communication Services:
We have now at our disposal latest means of communication such as telephone, fax, telex, internet, mobile phones, courier and postal services. Now we have radio, television and also satellite communications all over the world. Within a few minutes we can talk on phone with any person in Europe and America through satellite communication system.
h. Insurance Services:
Insurance gives protection against risk, e.g., accident, fire, death, theft, sickness, unemployment and so on. People can save for their children’s education, daughters’ marriage, or for their retirement. Security of life and property provided by insurance gives us freedom from anxiety, and peace of mind.
i. Financial Services:
Many consumers require the services of banks for financing their purchases of durable goods usually through instalment sales. In foreign countries there is even easy house financing through bank loans. Home-owning is made easy with the help of mortgage loans. Modern high standard of living has become a reality for masses due to customer- oriented marketing approach adopted by banks, particularly after 1950.
2. Industrial Service Marketing:
In the industrial market, many services are offered to facilitate the process of production, finance and marketing. Manufacturers, wholesalers and retailers also sell some services along with the sale of goods. They also buy many services in the conduct of their business. There are also specialised service firms selling their services to industry.
Industry wants the services of transport, storage, finance, insurance and communication services as these facilitate the business operations. Business also purchases specialised services such as merchant banking, advertising and sales-promotion services, engineering and office services.
a. Financial Services:
Banks, investment companies, accounting firms, financial institutions offer numerous financial services to business concerns. Finance is the life-blood of business. Long-term finance is required for fixed capital. Short-term finance is required for working capital. Merchant banking services are required for promoting new enterprises and floatation and marketing of new capital issues.
Investment companies guide business about the purchase of shares, bond and property to ensure sound investment portfolio. Accounting firms help in the maintenance of accounts, planning for profit, taxation and auditing of annual accounts.
b. Insurance Services:
Risk of loss in business is inevitable. Business risks are numerous. Many of them cannot be eliminated or avoided. But they can certainly be transferred or shifted. Insurance companies enable businesses to transfer many business risks conveniently.
They voluntarily assume the risk of loss due to fire, danger of the sea, dishonesty of employees or due to accidents in the factories. We have transportation insurance, unemployment and health insurance schemes to provide social security to employees. Insurance facilitates smooth running of business.
c. Transport and Warehousing Services:
Marketers need these services for physical distribution of commodities. Flow of goods in the process of marketing is facilitated through transport and warehousing services. Transport provides equalisation of supplies of physical products place wise, whereas warehousing assures equalisation of supplies time wise. These two wings of physical distribution offer maximum customer service and satisfaction.
d. Engineering Services:
There are specialised engineering firms to help businesses in the formulation and planning of new projects, designing and constructing of plant and buildings, installation of special equipment and its maintenance.
e. Advertising and Promotion Services:
Advertising agencies are specialised institutions for selling their services in all forms of marketing communications. They act as marketing research agents for their principals. They help marketers in the preparation of promotion mix and the campaign for advertising and sales promotion.
f. Office Services:
Business firms can buy a variety of office services. There are firms to sell cyclostyling and duplicating services. Some concerns are prepared to supply temporary office personnel, such as typists, filing clerks, stenographers and secretaries. Some firms specialise in providing office cleaning services and security services.
g. Management Consultancy Services:
Consultancy service firms offer numerous services to business concerns. They offer expert advice to top management on all managerial problems of production, finance, marketing, personnel and office administration. A consultant specialises in a particular branch of business and sells his ideas, plans and solutions on any business problem.
Classification of Service Marketing – Classification by Industry, Target Market Effect, Skill Level of Service Provider, Labour Intensity and Degree of Customer Contact
Various attempts have been made for classification of service marketing of which some as guides with diversity of firms in the service sector. Five schemes bases presented to classify services in ways that provide strategic insights for allowing firms to outperform in competition. Noted marketing author Christopher Lovelock, provides following classification schemes.
Thus classification of service marketing can also be done on following basis:
1. Classification by Industry;
2. Classification by target market effect;
3. Skill level of service provider (both professional & nonprofessional);
4. Labour intensity (people – based/ equipment-based);
5. Degree of customer contact.
1. Classification by Industry:
d. Finance & Insurance
f. Public utilities
g. Govt. services
i. Hospitality industry
j. Business services
2. Classification by Target Market Effect:
(Based on degree of customer involvement – Lovelock)
a. People Processing- Services aimed at physical care e.g. Health care, Clinics, Restaurants, Hospitals, Hair Salons, Fitness centre.
b. Mental stimulus processing- services aimed at mind of the consumer e.g. Education, Entertainment, Psychotherapy, and Reiki.
c. Possession Processing- Service aimed at physical possession & tangible assets e.g. Repair & maintenance, Laundry, Repair services, Landscaping, House cleaning etc.
d. Information processing- Service for intangible assets e.g. Banking, Legal consultation. Brokerage, Financial service.
4. Labour Intensive:
5. Degree of Customer Contact:
a. High degree- TV Channels, Mobile etc.
b. Moderate- Teacher, Barber.
c. Low degree- Priest, Doctor etc.
Marketing of industrial goods services & marketing of consumer goods services:
1. Marketing of Industrial Goods Services:
Industrial goods refer to the goods which are finished goods of an industry and used as input in some other industry.
Goods used for resale or in rendering services.
Hence industrial goods are intended for use:
a. In making other goods.
b. In conducting business.
c. In providing benefit.
There are six categories of industrial goods:
i. Raw material,
iii. Accessory Equipment,
v. Components & Materials
i. Raw Material:
Raw material are goods that become part of the product but, have not undergone any further processing than what is needed for safe, convenient, economical transport and handling. Two types of raw materials- a. Farm products-e.g. vegetables, fruits, eggs, etc. b. Natural products- e.g. Lumber, fish, oil, minerals etc.
Items which are expended, depleted or worn out during the years of use and does not become part of the final product are installations. Two classes of installations are- a) Buildings & land rights, b) Major equipments e.g. tractor, generators, computing services.
iii. Accessory Equipment:
Accessory Equipments, like Installations do not become part of product but are cheaper than installation & are short lived e.g. writers, cash registers, stationary, desks, small power tools.
Supplies are short lived, low priced items which are used for operating purpose and does not have much significance like installations they are called ‘convenience goods’ in industrial market.
There are three categories of supplies- a) Maintaining b) Repair c) Operating supplies
v. Components & Materials:
Directly related with the product & become part of the product. Components & material requires more processing than raw material.
Intangible, non-physical offerings that are valuable in supporting the operations of a firm. For example security services, legal consultation, engineering services etc.
Industrial goods, required but are demanded, with following Principle factors which acts like motivators- 1) Cost 2) Product quality 3) Safety 4) After sales services 5) Reliability of seller 6) Terms of sale 7) Speedy delivery 8) Healthy relationship.
2. Marketing of Consumer Goods Services:
Consumer goods is defined in simplest terms as “consumer goods are goods which are consumed by end user” which includes product and services.
This is final product and classified in 3 categories:
i. Classification based on products life and rate of consumption.
ii. Traditional classification.
iii. “Characteristic of goods” theory.
i. First classification further classifies goods in three following categories:
a. Durable goods tangible, physical goods which have extended period of use, e.g T.V., Fridge, Automobiles etc.
b. Non-durable goods – short lived because of high consumption after purchases but are physical, tangible. It includes soap, food, paper, shoes etc.
c. Services are intangible products or activities, benefits, satisfaction & behavior which are for sale, e.g. auto repairs, hair salon, entertainment.
ii. Characteristics of Goods Theory:
This theory is advanced by Leo. V. Aspinwall. It’s an attempt to make the assumptions about convenience, shopping and specialty goods more explicit and more exact.
This is an useful and slight expansion of traditional four-way classification of goods, but is still limited as a pragmatic marketing tool.
Classification of Service Marketing – Consumer Service Marketing and Industrial Service Marketing
Service Marketing can basically be classified according to the market in which they are sold.
1. Services sold in the consumer market and
2. Services sold in the business or industrial market
However it must be remembered that many services like financial service, insurance, transportation and communication services are sold to both the markets. As such they have been included only in the consumer services and have not been repeated in the industrial services.
In the modern day world, dominated by effluence and a highly consumerist approach, where material things and comfort are on a high priority of people, the following are some of the services offered to the consumer market.
(a) Food Services:
Restaurants, hotels, cafeterias, dhabas, coffee shops, sandwich bars etc. offer food services to a consumer base that is growing everyday. All these provide food service. The service experience differs in each of these depending upon the ambience of each.
Today, we also have fast food chains like Pizza Hut, Dominos, Mc Donald’s and KFC open shop in India to cater to the growing demand of a different variety of food experience of Indians. We now have restaurants specialising in multi-cuisine to cater to the upper market adventurous consumer.
(b) Hotels and Motels:
With growing affluence comes the desire for entertainment and travel. Today, we see a large number of hotels right from the glamorous seven star hotels in the metropolitan cities to the smaller motels in the suburbs. The hotel industry offers not just a stay but a number of facilities like conference hall, health club, beauty salon, sports club etc. depending upon the level of the hotel.
(c) Personal Care Services:
These include the services offered by beauty parlours, naturopathy centres, massage parlours, health and fitness centres etc. Due to the increased standard of living and a growing self-awareness, people have become more health, beauty and physique conscious and this has led to an explosion of centres offering ‘Personal Care Services’ all over the country.
(d) Medical and Surgical Services:
As with all other professions, the medical profession too has seen a massive development in recent times. Many states of art medical centres that provide all kinds of services, right from consultation to diagnosis, operation to post-operative care and rehabilitation have mushroomed. Specialisation is on the rise and we have specialists today on every small anatomical aspect of the human body.
(e) Educational Services:
Gone are the days when a ‘Student’ was merely someone who came to acquire knowledge. Today he is a customer to be satisfied by the education and educational facilities offered by the educational institution. With the growing number of foreign and private educational institutions, getting admission to an Institution of your choice is merely a matter of paying the right amount of money.
(f) Household Services:
With the increasing standard of living and affluence of people, we have an increasing number of household service providers. Organisations today provide maids, baby sitters, gardeners etc. for households.
(g) Automobile Services (Garages):
Today we have a number of two-wheeler and four wheeler vehicle service centres. These centres today not only provide the service of repair and maintenance of the vehicle but also provide the service of pick and drop of the vehicle from the residence of the owner. They also remind the owner about when the next servicing is due.
(h) Entertainment Services:
Rising purchasing power and more leisure time are responsible for the growing entertainment needs of the society. Today we have many amusement parks, water parks, theatres and multiplexes. Theme parties, fashion shows, dances and Gazal nights are also on a rise. Virtually every five star hotel today has a disco. Sports, entertainment and gaming parks too are on the rise. The number of entertainment options available is increasing day-by-day and so is the number of services being offered by them.
(i) Transport Services:
Railways, roadways, airways and waterways provide transport facilities for the movement of both goods and people. Today we can see a massive improvement in the road and air facilities. The Golden Quadrilateral Project, linking the four major metropolitan cities in India is underway. A number of flyovers can be seen in the metropolitan cities.
The BOLT (Build, Operate, Lease and Transfer) system has helped the Indian government in the development of its roads. Similarly the entrance of private airlines has led to a development of Indian airways. With the increase in competition, air travel has become cheaper and affordable to a growing number of people. A further reduction in air travel fares and increase in the number of people travelling by air will be seen in the near future.
(j) Communication Services:
The greatest advancements have been seen in communication services. Especially with the advent of IT, traditional means of communication like mail and telephone have been replaced by mobile phones, e-mail, chat and sms (short message service). Through the satellite communication system, the whole world has become accessible within a matter of seconds and the click of/a few buttons.
(k) Insurance Services:
Insurance gives us security and protection against risk to self and property. Today we have a number of private players in this sector and hence insurance services too are witnessing a high level of competition. This is very advantageous to the consumer as he benefits in the form of high level of service and lowering premium rates.
(I) Financial Services:
Today we have a number of banks and financial agencies all willing to provide financial services to the consumers. Right from helping him invest funds to providing housing and car finance, to providing ATM and 24 hour banking services. Internet banking is the name of the game today and all banking transactions can be performed right from the consumer’s office or residence.
(m) Personal Security Services:
Today in India even though affluence and standard of living is increasing there is still a very strong divide between the haves and the have-nots. This has resulted in an increasing demand for personal security of the lives and possessions of the haves and as such has led to the establishment and growth of personal security services providers. This not only includes the providers of security guards and watchmen but also the providers of home security alarm systems.
In the industrial market a number of services are offered that facilitate the production, finance, distribution and marketing of goods.
Some of these are as under:
(a) Engineering Services:
Engineering firms undertake a variety of essential industrial services. These are specialised concerns that help businesses in the formulation and planning of new projects, designing and construction of plant and buildings, installation of special equipment and its maintenance.
(b) Warehousing Services:
Warehousing services are essential to hold stocks from the time that they are manufactured to the time that they are consumed. Manufacturers and marketers should have their own warehousing facilities. However, there are various government and private warehouses that hire out their services to manufacturers and marketers requiring the same.
(c) Advertising and Promotion Services:
Advertising is a highly creative and capital intense line. Most manufacturers and marketers depend upon advertising agencies to promote their products. Advertising agencies are specialist institutions that plan, design and place advertisements in various media at the least cost with a professional touch.
In other words they help marketers in the preparation of the promotion mix and the campaign for advertising and sales promotion. They also perform various other related services and act as market research agents for their principals.
(d) Office Services:
Every business today requires an office and office related services. There are many firms today that supply office related services like cyclostyling and duplicating services, supply of temporary office staff, cleaning services and security services.
(e) Management Consultancy Services:
Management consultancy services offer numerous services to business organisations. Such firms offer advice to organisations right from the stage of conception to inception of the firm. Such organisations further advice the top management on the handling of problem areas in all functional areas like production, marketing, finance, personnel, office administration etc. Management consultancy services are a boon to the small and medium firms as, due to the existence of these firms, specialised and professional advice is available to these firms, at a reasonable cost.
(f) Marketing Research Services:
In today’s scenario of a cut throat competitive environment, a competitive advantage plays a vital role in the success of a business. This is where market research gains importance. Knowledge about customers, consumers, competitors, suppliers etc., gives a competitive advantage to any firm.
Market research firms perform the service of collecting, tabulating and analysing data about the various people and parties involved in a business and thereby help the business organisations to develop the right and correct marketing strategies.
(g) Manpower Selection and Training:
The success of any business depends upon the productivity of its human resources. It is very essential to select the right candidate for the right job. Further, continuous training is a must to see that the human resource is working to its maximum capability.
The more skilled and updated the human resource the better will be the performance of the company. Some business organisations prefer to outsource this important function of selection and training of human resources. As such you have firms that specialise only in recruitment and training and perform this service for various business houses that require the same, for a fee.
The above are some of the services that are offered to the industrial buyer. However services like food services, hotel and motels, financial, insurance, transportation, communication and entertainment are offered in both the markets. The above lists are by no means comprehensive they are only illustrative.