The three earlier described service providing concepts are closely linked to the basic marketing strategies that can be used. Every company has to make a choice between quality and price (and the best organizations are able to choose both, but this is rather rare). In general, choosing for price leads to self-service, and choosing for quality to tailored service. Standard service is somewhere in between, but tends to lie closer to the price choice.

Price Competition

Price competition implies striving for the lowest price possible. This means a high cost-awareness is employed on all levels of the company processes. Often used strategies are:

• Using scale size and learning curves.
• Industrializing the service providing.
• Co-production by clients.
• Specializing on the ‘fast runners’.

Using Scale Size and Learning Curves

The learning curve principle states that with every doubling of the production, the costs for each unit to be produced will decrease by 15 to 25%. What this strategically means is that important cost benefits can be realized by building experience faster than the competition. So, being the first on a new market could potentially be quite beneficial. The main elements of a learning curve strategy are:

• The aimed search for experience building opportunities.
• Creating an efficient scale size (not so big that it becomes difficult to handle, but large enough to keep the costs as low as possible).

Industrializing the Service Providing

Using technology is also a good way to decrease costs (mostly after an initial investment). This is mainly the result of a reduction in personnel costs. These technologies can potentially be divided into three groups.

• Hard technology: machines and/or computers that replace the contact staff.
• Soft technology: an individual operation by a contact person is replaced by a planned system, which may involve machines and/or computers.
• Hybrid technology: a combination of hard and soft technologies (for example, an expert system which allows a physician to make a diagnosis).

Co-Production by clients

By letting clients do certain activities, cost can also be reduced. In most cases, this coincides with the industrialization of the service provision, but this is not necessarily so. Important to realize is that some client groups are more or less capable or willing to co-produce.

Specializing on the ‘Fast Runners’

For smaller enterprises in the service sector, lower costs can be realized by specializing on the ‘fast runner’ in their assortment. This means the service that sell best. By specializing on one service, or a limited number of services, the learning curve can be descended quicker, which is a means to acquire a cost advantage on competitors.

The four previously mentioned price competition strategies can of course by used in combination. It is important for a company, however, not to focus entirely on the costs, but also take in account quality and customer service.