Service marketing

Marketing of service is a form of marketing that focuses on selling services. Some businesses
offer both products and services and must use a mix of styles; For example, a store selling
mobile phones also helps people select mobile phones and provide mobile repair. Such
stores should market both their products and ancillary services offered to customers.

When people market services, the goal is not to get more customers to buy the product, but
to get more people to do business with a particular company, often in a specific location. For
example, a restaurant provides a service: it provides food to customers, in both cases and
in-go forms in many cases. When the restaurant itself comes to the market, it should
convince people that it is better for other restaurants and its convenience is worth visiting.

Services marketing is an organizational function and a set of benefits for the organization
and stakeholders in a way to identify or create customers, communicate and deliver value
and manage the customer relationship.

Definition by James Fitzsimmons

A service is a time-perishable, intangible experience performed for one customer acting in
the role of co-producer.

Characteristics of services:

Intangibility: Services are intangible and have no physical existence. Therefore services

cannot be touched, held, tasted, or melted. It is the most defining feature of a service and
what primarily distinguishes it from a product. Furthermore, it is a unique challenge for
those engaged in marketing service because they are required to engage tangible features
otherwise intangible.
Perishability: Services cannot be stored, saved, returned or resold once used. Once the
service provided to one customer is completely consumed and cannot be passed on to
another customer. For example, a customer dissatisfied with a barber’s services cannot
return the haircut service that was provided to him.
Heterogeneous: Given the nature of the services, each service offering is unique and even
the same service provider cannot do exactly that again. While products can be produced on
a large scale and the same is not true of services. Ex: At McDonalds, all burgers of a certain
flavor are almost identical. However, the same is not true for services that are consistently
served by two customers.
Inseparability: Inseparability refers to the fact that services are generated and consumed
within the same time frame. For example, a haircut is given by a customer simultaneously,
on the contrary, a takeaway burger, which the customer can consume even hours after
purchase. Furthermore, it is very difficult to separate the service from the service
provider such as a barber is necessarily a part of the haircut services he is offering to his
client.

Advantages of Service Marketing:

Service marketing has grown exponentially over the past decade because of the variety of
benefits it offers companies. Some of the benefits of service marketing include:
Continuous Sales: When service marketing focuses on meeting the needs of customers, it
causes repeat sales. Happy customers come back for another purchase. For example, a
customer who has a saving account with Citibank and is happy with services such as online
banking. Phone banking etc will go to Citibank to apply for the loan. Thus, Citibank’s service
marketing efforts translate into higher sales.
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Reviews and Verbal: A happy customer is likely to spread the word about his or her
experience to many. Today, in the era of the Internet and rapid communications, reviews
play an important role in deciding whether or not to buy a product. Negative reviews about
product service are rapidly spreading. With the appropriate in-service marketing strategy,
companies can ensure that customers are satisfied with their positive experiences.
Contributing to Economic Growth: Service marketing is particularly beneficial to developing
countries. It provides an opportunity to showcase their skills and commitment to quality
when it comes to services. By applying proper service marketing strategies, companies can
gain customers ’trust. Nationally, this leads to an increase in employment levels, an increase
in foreign exchange reserves, an increase in exports and GDP.

Challenges of Service Marketing:

Growing and profiting with product and service businesses can be challenging tasks. But the
challenges here are different from one to the other. Listed below are some of the most
common and difficult challenges, such as developing and managing consulting, professional
or technical service businesses that are not relevant to product businesses. And price-fixing.
Services are often produced and consumed simultaneously: Services are often produced
and consumed simultaneously this creates special challenges in service quality management
that even product companies do not consider it. The products will be tested before they go
out the door. If a product has quality problems in the product, the company can fix them
and none of the customers are smart. Service production occurs by creating the most
diverse and challenging volatility the customer currently has.
Trust is essential: Some level of trust must be established in the service organization and its
people before customers can engage in services. This is very important. Sometimes service
offerings and their value are more important than the proposal.
Clients cannot see or touch services before buying them: this makes services difficult to
conceptualize and evaluate from the client’s perspective, creating greater uncertainty and
risk perception. From the company’s perspective, the intangibility of the service can make
services difficult to promote the quality of control and set a price.
Brand marketing extends beyond: Brand in service businesses is about who you are as you
say it. Like external communications, internal brand management and communications are
equally important to marketing success.
Creating active leadership generation difficulty: Many service companies have tried and
failed to use lead generation strategies that work wonders for product companies. If it is
implemented correctly, the traditional production techniques such as direct marketing and
sales can work for services, but the spatial dynamics of how customers buy services should
be carefully tied into your strategy.
Service providers often make sales: No product companies have dedicated sales force. In
terms of services, sales are often split between sales marketing, professional and
administrative staff.
Marketing and sales lose momentum: Most product companies are dedicated to marketers
and sellers. They continuously market and sell regardless of the amount of revenue they
generate. Multiple services manage and deliver marketers and sellers in companies. This
often leads to a widespread switching between service revenue roller coaster revenues and
job overflows and earnings and job drought.
Interest is still elusive: Your employees bring more passion, spirit, buzz, and desire to the
company every day, and you get more revenue and success. The relationship between
employee interest and financial success is direct and measurable.

Challenges of Service Marketing and Effective Ways to Overcome It

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What is Service Marketing? 

From the dentists that check our teeth to the designers who bring our dream website to life,
these are two of the many professionals who provide service-based products to their
clients. And if you’re interested to build a service-based brand, you need to understand
service marketing.

Service marketing refers to the creation of a plan or strategy to sell an intangible product to
customers. In short, these goods cannot be seen, heard, touched, or kept by a customer
unlike the ones in product marketing. The company is entirely responsible for its service
process. 

Business sectors such as insurance, tourism, and hospitality use service marketing to drive
growth and success in their industry. 

However, it’s essential to remember that service marketing is a bit more challenging

compared to product marketing due to its unique characteristics.  

Service Marketing: Challenges and Solutions 

After identifying the characteristics of service marketing, let’s take a closer look at its
challenges and how brands can resolve them. 

Lack of physical character

Selling a service is much harder than selling a product since the latter can be seen Products
allow the customer to examine their physical quality and characteristics to help with their
purchasing decision.

Solution: Get customers involved. Nothing helps sell more than positive word of mouth. A
good service marketing strategy implements plans that aim to achieve positive experiences
to boost consumer trust and sales. Leveraging SEO tools is one way to help you reach a
larger number of people online.  

Perishability of services

Services are considered perishable because a business needs to sell a specific amount of
services in a designated time period to cover expenses and generate revenue. A hotel, for
example, needs to book out a specific number of rooms every week. When a room lies
empty due to lack of demand, that service pauses for that time period. 

Solution: In periods of low demand, service providers can rely on marketing strategies that
quickly attract consumers. These can include loyalty rewards, discounts, and promos. 

Variability

The last major challenge to service marketing is the variability of services offered to
consumers. When two individuals purchase the same product, they are likely to have the
same quality. But in the case of services, quality may vary based on who is offering the
service and where.

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A psychological clinic, for example, hosts a number of therapists. But not all therapists share
the same years of experience and therapeutic approach. These differences can affect the
success rate of the clients they handle. 

Solution: Concerted efforts to train all service personnel must be undertaken to keep the
variations in service delivery to an absolute minimum. This usually includes vigorous training
sessions, marketing tools, and detailed operational guidelines that personnel must abide by
at all times.  

Read: 9 Steps to Writing an Effective Marketing Plan

Drive more ROI to your service-based business

Coming up with a good service marketing plan can be a daunting task. It requires dedication,
strategic planning, and hard work. And challenges may occur along the way. Identify and
resolve them with these solutions. 

Also, make sure you equip your business with the right online marketing tools that get you
ahead of the competition.

PESTEL analysis

A PESTEL analysis is an acronym for a tool used to identify the macro (external) forces facing
an organisation. The letters stand for Political, Economic, Social, Technological,
Environmental and Legal. In this blog, we will look at what a PESTEL analysis is used for as
well as the advantages and disadvantages of using it in a business setting.
In marketing, before any kind of strategy or tactical plan can be implemented, it is
fundamental to conduct a full situational analysis. This analysis should be repeated every six
months to identify any changes in the macro-environment. Organisations that successfully
monitor and respond to changes in the macro-environment can differentiate from the
competition and thus have a competitive advantage over others.
The framework is also used to identify potential threats and weaknesses which are used in a
SWOT Analysis when identifying any strengths, weaknesses, opportunities and threats to a
business.
Let’s look at each element of a PESTEL analysis.

Political Factors

These determine the extent to which government and government policy may impact on an
organisation or a specific industry. This would include political policy and stability as well as
trade, fiscal and taxation policies too.

Economic Factors

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An economic factor has a direct impact on the economy and its performance, which in turn
directly impacts on the organisation and its profitability. Factors include interest rates,
employment or unemployment rates, raw material costs and foreign exchange rates.

Social Factors

The focus here is on the social environment and identifying emerging trends. This helps a
marketer to further understand consumer needs and wants in a social setting. Factors
include changing family demographics, education levels, cultural trends, attitude changes
and changes in lifestyles.

Technological Factors

Technological factors consider the rate of technological innovation and development that
could affect a market or industry. Factors could include changes in digital or mobile
technology, automation, research and development. There is often a tendency to focus on
developments only in digital technology, but consideration must also be given to new
methods of distribution, manufacturing and logistics.

Environmental Factors

Environmental factors are those that are influenced of the surrounding environment and
the impact of ecological aspects. With the rise in importance of CSR (Corporate
Sustainability Responsibility) and sustainability, this element is becoming more central to
how organisations need to conduct their business. Factors include climate, recycling
procedures, carbon footprint, waste disposal and sustainability

Legal Factors

An organisation must understand what is legal and allowed within the territories they
operate in. They also must be aware of any change in legislation and the impact this may
have on business operations. Factors include employment legislation, consumer law,
healthy and safety, international as well as trade regulation and restrictions.
Political factors do cross over with legal factors; however, the key difference is that political
factors are led by government policy, whereas legal factors must be complied with.

How to do a PESTEL Analysis?

There are several steps involved when undertaking a PESTEL analysis. At first, it is important
to get a group of people together from different areas of the business and brainstorm ideas.
Next, you will want to consult and seek the opinions of experts from outside your business.
These could be your customers, distributors, suppliers or consultants who know your
business well.
The third stage will involve you researching and gathering evidence for each insight in your
Analysis. Then you will want to evaluate and score each of the items for ‘likelihood’; how
likely it is to happen and ‘impact’; how big an impact it could have on your business.
The final stage involves refining your ideas and repeating the proves until you have a
manageable number of points in each of the six categories.

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Advantages and Disadvantages of a PESTEL Analysis

It is an essential analysis tool for any strategist’s toolkit but there are some benefits and
challenges associated with it.

Advantages of a PESTEL Analysis:

 It can provide an advance warning of potential threats and opportunities

 It encourages businesses to consider the external environment in which they
operate
 The analysis can help organisations understand external trends

Disadvantages of a PESTEL Analysis:

 Many researchers argued that simplicity of the model that it is a simple list which is
not sufficient and comprehensive
 The most significant disadvantage of the model is it is only based on an assessment
of the external environment

Final Thoughts

A PESTEL analysis helps an organisation identify the external forces that could impact their
market and analyse how they could directly impact their business. It’s important when
undertaking such an analysis that the factors affecting the organisation are not just
identified but are also assessed – for example, what impact might they have on the
organisation? The outcomes can then be used to populate the opportunities and threats in
a SWOT analysis.
The PESTEL Framework Explained: 6 Important Factors
FEB 6, 2022 BY PESTLEANALYSIS CONTRIBUTOR

A PESTEL analysis is a tool or framework for marketers. You can use it if you are seeking to
analyze and screen the external marketing environment of your company. The strategic
management tool gauges macro-environmental factors. The results make decision-making
much easier.

Different macro-environmental factors can affect business strategies. So, it is vital to follow

the PESTEL framework. The aim is to assess how exactly the factors influence business
performance.

You can judge 6 types of environmental influences in the PESTEL framework. PESTEL is
broken down into six categories referencing factors that can or will affect the topic chosen
for the analysis.

They are:

 Political
 Economic
 Sociocultural
 Technological
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  Environmental
 Legal

You should not see these factors as independent factors. They are all interdependent. For
example, technological advances can affect the economy in different markets.

The 6 factors I mentioned above make up the acronym PESTEL. Each letter represents one
factor. It is often called PESTLE. PEST follows the first four categories and excludes
‘environmental’ and ‘legal’ factors. PESTLE includes all categories but swaps the ‘E’ and ‘L’
(environmental and legal factors) around.

You may these factors using other tests too. PEST, STEEP, and STEEPLE are similar analyses.
Some other variations are STEPJE, STEP, and LEPEST. Managers can choose any, based on
the nature of the firm and the factors they wish to study. PESTEL analysis helps to identify
key factors to acknowledge, understand, and potentially use to your advantage.

I have discussed some characteristics of these environmental factors below. The article will
help you find which factors are more important to your company’s strategy. This might
serve as a preliminary inspiration. You will have to dig deeper into the details to take
accurate decisions.

What exactly do the categories in the PESTEL framework consist of? Each is unique and
offers a broad understanding related to factors involving politics, economy, social traits,
tech uses, environment, and legalities.

Contents
 Political Factors in the PESTEL Framework
 Economic Factors in the PESTEL Framework
 Social Factors in the PESTEL Framework
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  Technological Factors in the PESTEL Framework
 Environmental Factors in the PESTEL Framework
 Legal Factors in the PESTEL Framework
 Why use the PESTEL Framework?
Political Factors in the PESTEL Framework

Politics plays an important role in business. This is because there is a balance between
systems of control and free markets. As global economics supersedes domestic economies,
companies must consider numerous opportunities and threats before expanding into new
regions. It also applies to firms identifying optimal areas for production or sales. Political
factors may even help determine the location of corporate headquarters.

This category can sometimes combine laws (from the legal group) since the government and
their bills are closely linked.

Some of the political factors you need to watch are:

 Tax policies
 Stability of government
 Entry mode regulations
 Social policies (e.g. social welfare etc.)
 Trade regulations (e.g. the EU & NAFTA)
 Trade traffics
 Labor regulations
 Health & Safety

Economic Factors in the PESTEL Framework

Economic factors are metrics that measure the health of any economic region. The
economic state will change a lot of times during the firm’s lifetime. You have to compare the
current levels of inflation, unemployment, economic growth, and international trade. This
way, you can carry out your strategic plan better.

Any business or product will be affected by general economic factors such as goods,
services, monetary value or currency. Indicators like exchange rates, GDP, and inflation are
critical to management. They can tell when it is a good time to borrow. These factors help
find out how an economy might react to certain changes.

Some examples of economic factors you can take into account in your PESTLE analysis are:

 Disposable income of buyers

 Credit accessibility
 Unemployment rates
 Interest rates
 Inflation
 Exchange rates

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Social Factors in the PESTEL Framework

Social factors assess the mentality of individuals or consumers in a given market. These are
also known as demographic factors. This category focuses on buying behavior and how
consumer needs can affect the value and necessity of a product or service.

The following are some social factors to focus on:

 Population demographics: (e.g. aging population)

 Distribution of Wealth
 Changes in lifestyles and trends
 Educational levels
 Cultural differences
 Ethnicities
 Employment
 Location

Technological Factors in the PESTEL Framework

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This step entails recognizing the potential technologies that are available. Technological
advancements can optimize internal efficiency and help a product or service from becoming
technologically obsolete. The role of technology in business is increasing each year. This
trend will continue because R&D drives new innovations.

Recognizing evolving technologies to optimize internal efficiency is a great asset in

management. But, there are a few threats. Disruptive innovations such as Netflix affect
business for DVD players. The best strategy is to adapt according to the changes. Your
strategies should sidestep threats and embrace opportunities.

Technology is continuously evolving — and not just digital technology, although the use of
applications, websites, and similar products is on the rise. But even technology related to
manufacturing, distributing, or communicating with consumers/employees must be
considered too.

This is a large challenge for management. Below is a list of common technological factors:

 New discoveries and innovations

 Rate of technological advances and innovations
 Rate of technological obsolescence
 New technological platforms (e.g. VHS and DVD)

Environmental Factors in the PESTEL Framework

Sometimes referred to as ‘ecological’ factors, these factors involve physical changes. Think
less of the workplace environment — which would apply to communication amongst
employees — and more about the way in which locations are affected.

Both consumers and governments penalize firms for having an adverse effect on the
environment. Governments levy huge fines upon companies for polluting. Companies are
also rewarded for having a positive impact on the environment. Consumers are willing to
switch brands if they find a business is ignoring its environmental duties.

The impact on the environment is a rising concern. Note that the environment benefits the
company too. Running water for a hydro-power plant is an example.

A few common environmental factors of the PESTEL framework are:

 Waste disposal laws

 Environmental protection laws
 Energy consumption regulation
 Popular attitude towards the environment

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Legal Factors in the PESTEL Framework

This step involves learning about the laws and regulations in your region, in other words,
ways in which particular laws may affect business, ideas, or concepts. It is critical for
avoiding unnecessary legal costs. They’re created by the government, which is why they are
sometimes weaved within the political section of PESTEL analysis. But the regulations here
focus on the well-being of the consumers or society rather than benefiting the agencies
who crafted the laws.

This is the last factor in the PESTEL framework. These factors overview the legal elements.
Often, start-ups link these elements to the political framework. Many legal issues can affect
a company that does not act responsibly. This step helps to avoid legal pitfalls. You should
always remain within the confines of established regulations.

Common legal factors that companies focus on include:

 Employment regulations
 Competitive regulations
 Health and safety regulations
 Product regulations
 Antitrust laws
 Patent and Copyright infringements
 Import/Export laws

Why use the PESTEL Framework?

When you go through each of the six categories and apply the research to your business,
product, or concept, you will understand what is standing in the way of its success. It is
common to conduct a PESTEL analysis before serious decisions. Managers might conduct

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it before any large projects are undertaken. Understanding all the influencing factors is the
first step to addressing them.

You can’t override copyright laws, just as you can’t lower taxes or inflation rates. But you
can understand what percentage of taxes will cost your business each quarter. Or what it
means for the economy, as a whole, if inflation rates skyrocket.

With this understanding in place, you can use it to your advantage. Especially compared to
competitors who don’t use the PESTEL framework.

Remember, there are many factors other than these which can have an effect on business
success.  The evaluation is a one-to-one process. Each company should do it for themselves
and find the key drivers of change. You must identify the factors which have strategic and
competitive consequences.

Analyzing the total macro-environment is an extensive task. Even though, it is complex,

understanding the PESTEL framework of basic influences will allow you to maintain an
organized and strategic approach. These will isolate each opportunity or threat.

After writing down the PESTEL framework, company managers can create strategies. The
macro-environmental factors will shape the strategies. I am sure that the thinking process
will be as sensitive as current and future environmental factors.

PESTEL Analysis
We know that a business firm in an economy is affected by both micro and macro factors in its
external environment. In addition, these factors are not in control of the firm themselves.
However, PESTEL analysis is a tool that helps in analysing these factors. Furthermore, this is
what firms use to understand and monitor the macro-environmental factors. So let us see how
this is done.d PESTEL Analysis Definition

PESTLE or PESTEL Analysis is a tool which helps companies have a ten thousand foot view of
the macro environment it is operating in. PESTEL is an acronym and the letters stand
for Political, Economic, Social, Technological, Environmental and Legal. Also, this framework
helps to keep track of all the changes happening in the environment.

Moreover, this framework has undergone many changes and also has many variations.
Previously it was only PEST analysis. Then the legal environment was included later. At the
present time, a debate is going on about including Ethics in the framework.

Furthermore, PESTLE is a more comprehensive and inclusive framework than its previous
counterparts. As it is relatively easy to understand and implement. Also, it aids management in
the decision-making process and urges proactive actions. Thus, the firm is not only reacting to
the changes in the environment but also is converting opportunities into results.

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(Source: Business-to-you)

Factors of PESTEL Analysis

1] Political

These include factors that affect the extent and the impact of the government on the economy
of a country. For example, the laws, taxation policies, monetary policies, etc are all a part of
the political environment. Additionally, some political factors to consider are as follows:

 The political stability of the country

 Political ideologies of the government

 Taxation policies

 Regulatory practices and governing bodies

 Term of the government and any expected changes in the future

 Influential political leaders and their ideas

Browse more Topics under Business Environment

 Meaning and Characteristics of Business Environment

 Importance of Business Environment

 Relationship between an Organization and its Environment

 Environmental Impact and Analysis

 Environmental Scanning

 Macro Environment – Demographic Environment

 Elements of Micro Environment

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  Macro Environment – Economic Environment

 SWOT analysis

 Macro Environment – Political-Legal and Social Environment

 Macro Environment – Technological Environment

 Strategic Response to the Environment

 Macro Environment – Global Environment

2] Economic

Economic factors have a huge effect on the firm and its success. Some of the factors to
consider when monitoring the economic environment are as follows:

 Economic growth

 The current phase of the Trade Cycle (Expansion, Depression, etc)

 Inflation rates

 Unemployment Rates

 Current Interest Rates prevailing in the economy

 Important factors of the specific industry

 Consumer Spending potential

3] Social

Everything that goes on in a society greatly affects the organisation. Therefore, it is

important to analyse social factors while studying the social environment. For example,

 Demographics of the market

 Consumer Buying Patterns

 Religious and Cultural factors

 State and influence of the media

 Lifestyle trends in place at the time

4] Technological

The changes in the technological environment can be either an opportunity or a threat to the
firm. Hence, some technological factors to look for are:

 New production technology

 Manufacturing technology (increase in output, lowering of production cost, etc.)

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  New innovations

 Intellectual Property, Patents, etc.

 Maturity of technology

5] Legal

This refers to the laws made by the government that the company has to follow in order to
continue its operations. For example,

 Business Laws

 Environment Laws and guides

 Health and safety guidelines

 International Trade Agreements and Treaties

 Regional/Local Laws and Circulars

6] Environmental

These factors affect industries and their ability to function smoothly. For example, such factors
are:

 Environmental Issues

 Energy/Power Consumption

 Insurance Policies

 Safe Waste Disposal

 Dealing with hazardous material

Solved Question on PESTEL Analysis

Q: Does the culture of a country have an effect on the PESTEL analysis?

Ans: Yes, a culture of the market is an important factor of the macro environment. Thus, when
scrutinizing the social environment of an economy during PESTEL analysis, it is important to
look into the religious sentimoents and the prevailing culture of a market.

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