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6.5.6 Service strategy

In this section, we will explore service strategy, beginning with an important classification of services based on consumer purchase behavior. Understanding this classification is crucial for developing a robust service strategy.

Classification of Services Based on Consumer Purchase Behavior

1. High Search Quality Services

  • Characteristics: Easier to evaluate before purchase with low perceived risk.
  • Examples: Clothing, jewelry, furniture, houses, automobiles.
  • Implication: Since these services have a strong product component and are easier to evaluate beforehand, media marketing and promotional positioning play a significant role. The consumer can make a decision based on readily available information such as product descriptions, reviews, and advertisements.

2. High Experience Quality Services

  • Characteristics: Evaluation is possible only after consumption, with medium perceived risk.
  • Examples: Restaurants, vacations, haircuts, saloons, childcare, babysitting.
  • Implication: Here, consumers cannot fully evaluate the service before consumption. To reduce post-purchase dissonance, strategies like satisfied customer testimonials, customer feedback, and the use of the 7 P’s (People, Process, Physical Evidence, Product, Price, Place, Promotion) are essential for building trust and loyalty.

3. High Credence Quality Services

  • Characteristics: Difficult to evaluate even after consumption, leading to high perceived risk.
  • Examples: Legal services, repair of technical instruments, medical services, consulting.
  • Implication: For these services, word of mouth, customer advocacy, and satisfied customer testimonials become crucial. Since results are not immediately apparent (e.g., in consulting or medical services), customers rely on long-term outcomes and personal experiences. Developing customer communities and encouraging positive word-of-mouth recommendations are key strategies.

Key Elements in Service Strategy

When developing a service strategy, it is essential to focus on the following three aspects:

1. Differentiation

  • How do you differentiate your service from competitors? This could be through unique offerings, superior customer service, or exclusive features.

2. Service Quality

  • Ensuring consistent service quality is vital. Frameworks like the SERVQUAL model by Parasuraman, Zeithaml, and Berry can help in assessing and improving service quality. Quality control and maintaining a high standard of service every time are critical for customer satisfaction and retention.

3. Productivity

  • How do you increase productivity without compromising service quality? This could involve streamlining processes, investing in technology, or improving employee efficiency.

Service Positioning

Service positioning is similar to product positioning, but the techniques of application differ. Here are some key points about service positioning:

1. Promotion

  • Product promotion is more visual, engaging the right brain with images, videos, and ads. On the other hand, service promotion is more verbal and relies heavily on communication to explain intangible aspects.
  • For services, newspapers, magazines, blogs, or websites are more commonly used as they provide detailed information that helps the consumer evaluate the service.

2. Service Distribution

  • Unlike products, services are employee- or equipment-dependent. Therefore, the service provider (staff) becomes an essential part of the service experience. Choosing the right distribution channels—whether through franchises, exclusive outlets, or own stores—ensures quality consistency across locations.

3. Pricing

  • Pricing decisions play a significant role in service positioning. The trade-off between price competition and superior service expectations needs to be considered. Some services can be a differentiator by themselves. For example, offering free home delivery in retail can differentiate a store without affecting the price of the product itself. However, if delivery is charged, it introduces a price-related decision into the equation.

4. Service as a Differentiator

  • Services themselves can be differentiators. For instance, home delivery can become a unique selling proposition (USP) in a competitive retail environment. If one retailer offers free delivery while others charge, the retailer offering free delivery stands out.
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