About 50 services marketing executives will attend a two-day Strategic Services Marketing Management program starting Oct. 15 in Panama City, Panama organized by WDI. It will be taught by John Branch, a WDI faculty affiliate and faculty member at Michigan’s Ross School of Business.
The program is designed to: sensitize participants to the characteristics which distinguish goods and services; help attendees identify the unique strategic challenges of services; and provide participants with a new set of tools for managing these strategic challenges.
It will also help attendees: recognize and appreciate the importance of services in modern economies; understand the nature of services; have a framework for identifying the strategic challenges of services; and, have a set of tools for managing these strategic challenges in their companies.
After the two days, participants will be able to create a new strategic vision for the role of services in their organizations, develop tactical policies, procedures, and programs for implementing this strategic vision, and oversee the ongoing management of these tactical policies, procedures, and programs.
Branch talks a bit about services marketing.
Question: You have said that post industrial economies are dominated by services and that the key to success is to know how to manage them and commercialize them. Could you give us some ideas why it is and how to do it?
John Branch: Services are intrinsically higher valued added and more profitable. Companies (and countries), therefore, are motivated to move away from land-based and manufacturing activities to services. Some might even argue that this is the ‘natural evolution’ of an economy. It follows that managers must know how to market and manage services. The challenge, however, is that the management and marketing tools which most have learned were developed in a world of goods, and are most often not appropriate for services.
Q: Which are the keys to Services Marketing?
Branch: The logic is quite simple, really. It begins with the fact that goods and services are fundamentally different. These differences cause strategic challenges which are specific to services. And these challenges require specific services marketing and management tools. The keys to Strategic Services Marketing Management, therefore, are:
¦ Understand the differences between goods and services
¦ Appreciate the specific strategic challenges
¦ Develop the marketing and management tools for addressing these strategic challenges
Q: How does it impact final results?
Branch: In a competitive business world - one which is becoming more and more global in nature—expertise in Strategic Services Marketing Management is a competitive advantage, and, before long I suspect, a basic requirement of all organizations.
Q: What are the main trends in the area, and their impact on strategic management?
Branch: One interesting trend can be seen in manufacturing industries, in which very traditional manufacturing companies are augmenting (usually very profitably) their production with services, and, in some cases, switching their strategic focus entirely to services. Another interesting trend is the focus on making services more experiential. That is, making every commercial transaction an experience, almost like a theatrical production.
Q: Could you explain further the 4I model, and how companies can apply it with measurable results?
Branch: The 4 “I” model is one model for categorizing the many differences which distinguish goods and services. The 4 I’s are: intangibility, impossibility, inseparability, and inconsistency. The model helps an organization understand itself and its activities, and identify the strategic challenges which it faces.
Q: Which are the main tools to manage intangibility, and where is it possible to apply them in a company?
Branch: The two main challenges which arise from intangibility are: 1) the differences in the consumer ‘purchasing and consumption’ process; and 2) the differences in promoting and pricing services. Understanding these differences, therefore, is paramount to a services organization. One of the main challenges of intangibility is price fixing.
Q: How can you do that?
Branch: Traditionally, fixing a price is based on costs, competitors’ prices, and consumers (the 3 C’s). Because a service is intangible, each of these bases becomes more difficult. Competitors’ prices are more difficult to establish because services are more heterogeneous, services companies are often unwilling to give prices upfront, and prices are not always stated.
Q: What kind of companies should be interested in applying this new approach?
Branch: The tools of Strategic Services Marketing Management are important to all companies. In the past, managers made a great distinction between goods and services.
“You either sell goods or you sell services.” This distinction, however, was debunked in the 1980s when managers realized that all companies are in the business of selling products, with products containing both goods components and services components. Some products are very goods dominated, like salt or laundry detergent, and others are very services dominated, like maintenance or financial planning. But even fast moving consumer goods have a services component—a guarantee, which as a ‘deed,’ is a type of insurance, and very much a service. Adopting this approach, therefore, forces companies to recognize that Strategic Services Marketing Management is absolutely fundamental.