Problems in Service Marketing

Updated November 15, 2010

The process structure and basic characteristics of services can have serious and less serious consequences for the client behavior and internal organization, and through this for the marketing policy of those companies providing services. In this context, there are some core problems companies in the service sector are confronted with:

  • Insecurity of (potential) clients: this is caused mainly by the intangible nature and person-bound quality of services.
  • Variable quality: since personnel plays an important role in the service providing process, this process is hard to standardize, which implies a variable quality. This is why the quality of the provided service(s) is an important theme in service marketing.
  • Internal marketing: the quality of the provided service(s) depends strongly on the motivation and quality of the staff. This is why internal marketing is quite important in the service sector. The company culture often differs from those in production companies, which has to be taken into account.
  • Managing service providing processes: the production policy of service providing companies consists for a relevant part out of the managing of service providing processes. Marketing managers of production companies usually only deal with the output (or product) of the production process.
  • Client as production factor: the client is always a (large or small) part of the service providing process. So, managing the client as production factor (or co-producer) is an important task.
  • Attuning marketing and policy: marketing and policy should be closely intertwined, ideally even synchronized. In production organizations, this is not a requirement.
  • Relation management: the direct contact with and insecurity of clients create opportunities for the necessary relation management.
  • Capacity management: services can not be stocked up like physical products, so unused capacity will always be lost. An accountant with nothing to do, or a hotel room that is not occupied, both are by definition not productive. In that context, the transitory nature of services becomes apparent. On the other hand, the capacity can fall short when the question for a service shows unexpected peaks. These events could (and perhaps should) lead to the development of capacity management.

Three tasks

The core problems mentioned above are usually dealt with through a combination of three marketing tasks: external, internal and interactive marketing.

  • External marketing means ‘making the promise’,
  • Internal marketing means ‘making the promise possible’, and
  • Interactive marketing means ‘fulfilling the promise that was made’.

This is (in a strongly simplified form, of course) the marketing concept that is often used by service providing companies at present.