Shift in Service Marketing

The Biggest Shift in Marketing Within the Last Decade

aftermarket service service contracts service marketing service revenue servitiziation Jan 06, 2021

In the 1980s Service Marketing was born. It was born out of the realization that services came with unique characteristics that required different strategies to be marketed. Marketing, at its core, refers to the creation of value for customers. Oftentimes, when the word marketing is used, it is about products/goods that are tangible. Service Marketing deals with the strategies that are needed to market and sell service offerings.

Service offerings are intangible and include offerings such as servicing your motor vehicle or other machinery and equipment. Service offerings also include visiting a hotel, going to the doctor, and conducting business at the bank. Some major characteristics of services are;

  •  The service cannot be separated from the service provider.
  • Services are highly perishable.
  • Services are inconsistent and for the most part, cannot be fully standardized.
  • A service cannot be produced in anticipation of demand.
  • Harder to communicate the value of a service.

The success of the service industry is heavily dependent on strategies and processes. The way the service itself is done is the marketing of the service in and of itself. An exceptional service marketing strategy focuses on the experience for each customer.

To succeed in service marketing, you need to be strategic, analytical, and systematic. This requires you to know some key things. These key things are:

  •  The size of your market
  • Customers’ wants and needs
  • The right price and the right offering

Service Marketing requires that consumers be educated about a service. As a business, you will have to explain to the customer why they need your service and why you are the best to provide it.

 Service marketing is difficult because you are essentially telling someone to buy something they will never own.

Service marketing is hard enough and just when we were getting the hang of things then came another shift.


The Shift

First, we had the Production concept, then we had the Product concept, then came the Selling concept, lastly, the Marketing concept came. That is how Marketing itself has evolved over the years. The marketing concept is the most dynamic of all and it is the longest-standing marketing concept. From the Marketing Concept, we had two areas, goods, and services. This division came because it was realized that goods had to be marketed differently. After all, they had very different characteristics. Marketing of goods further morphed. Today, the marketing of goods has shifted and morphed into what is known as Servitization. More and more companies are marketing the services of the good rather than the good itself.

Servitization is concerned with revenue generation from services rather than products. In some instances, the product has had to be turned into a subscription rather than a one-time sale. And, In its simplest form, Servitization is the act of selling the outcome of a product as a service rather than selling a product as a one-time sale.

Transitioning to a Servitized business enables a business to better meet the demands of consumers. In this business model, the consumer is at the forefront of everything that is done. This results in greater customer retention.


How Does Servitization Affect Your Business?

Servitization will affect you regardless of the industry you are in. Servitization will require you to reinvent the way you do business and the strategies you employ for revenue creation. For a company that is involved in the production of tangible goods, this move can be extremely difficult. A service culture is different from that of product culture. Product culture is a “make it and sell it” type of culture and as a result, the transition can be extremely difficult.

The implementation of a Servitization model comes with profitability uncertainty for businesses that are in the product industry. As a result, this prevents many companies from making the shift and embracing Servitization.


Priming Your Business for Success

With the new year just arriving you must prime yourself for success for the rest of the year. Much uncertainty associated with transitioning to Servitization can be eliminated by getting the right start. The best way to do this is to conduct a Marketing Audit. A Marketing Audit is an analysis of the marketing environment of a business. It is comprehensive and systematic. A marketing audit is used to fully understand the current marketing system at the Marketer's disposal.

A marketing audit helps management allocate resources and enables them to make informed decisions through facts, analysis, and data.

The question of how to conduct a marketing audit should be left to a third-party contractor contracted to do the Marketing Audit. With over 25 years in the industry of Service Marketing, the team at Blumberg Advisory Group are experts in this area.

Businesses now have to be forced to turn their product-based businesses into subscription-based businesses. If you are one of these businesses, do it right from the beginning. Contact Blumberg Advisory Group to get thought-provoking advice on how to go forward with your transitioning. With over 25 years of experience, they are sure to get you on the right path.

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