The Marketing of

Intangible Offerings
Mukhtar Halliru
Bayero University Kano
 What is a Service?

“Economic activity whose output is not a

physical product or construction, is
generally consumed at the time it is
produced, and provides added value in
forms (such as convenience, amusement,
timeliness, comfort, or health) that are
essentially intangible concerns of its first
purchaser”- Quinn et al (2007)
 What is a Service?

An intangible offering
involving a deed,
performance, or effort that
cannot be physically
possessed.
 The Dominance of Services

There is a phenomenal growth of

services due to shift towards a
service economy attributed to:
Rising affluence
 More leisure time
 Growing complexity of products that require
servicing.
 Services Defined

 Most company offerings to customers contain

an element of service and this is illustrated by
the service continuum.

The tangible–intangible continuum for goods and services

What is the Challenge?

Selling an Automobile
Versus
Selling Holiday Resort
 What is the Moral?

“The moral of the comparison is

that marketing exchanges that
do not involve ownership differ
from those that do and for this
reason, they are more difficult to
sell”
 Nigeria Railway Corporation

You cannot book train travel

tickets online – not even through
the NRC website. If you want to
travel through the train service,
you’d have to make your booking
at the train station
AutoStar
 Two Service Delivery Extremes

 GT Bank or Old Union Bank

 Film House Cinema – Ado Bayero

Mall or Queens Cinema in Kano?
Typical Government Owned School In Nigeria
 Despite they provide
“same” service,
Which would you patronize
over and over?
 Categories of Service Mix

 Pure tangible goods

 Tangible goods with
accompanying services
 Hybrid
 Major service with accompanying
goods
 Pure service
 Classification of Service Businesses

 Equipment Based: Could be

automated, monitored by unskilled
operators or possibly skilled workers.
Automated Teller Machine, Internet
Banking, Vending Machine.
Strengths and Weaknesses?
Classification of Service Businesses…

People Based: Provided by unskilled,

skilled or professional workers.
Marriage Counseling, Surgery, Local
Grass Cutting, Legal Services,
Tellering etc.
High points and Downside?
 Why Bother about Quality of Service
Delivery? Why Measure?

 “Service delivery often involves a

series of events or stages of
exchanges between service provider
and its customer. At each stage,
performance can meet, exceed or fall
below the customer’s expectations"
 - Sivakumar, Li & Dong (2014) Journal of Marketing: American
Marketing Association
Major Service Characteristic

Intangibility
 Three Other Characteristics
Resulting from Intangibility

Inseparability Production and Consumption at same time

Perishability Inventory cannot be stored

Heterogeneity Variability and Non Standardization

 Intangibility
 Service in Physical sense – Cannot be
touched, tasted, felt or seen before
purchase.
 Service in Mental sense – Cannot be
grasped mentally.
 Service providers need to manage by
providing evidence of the benefits to
reduce uncertainty.
 Typical DSTV Subscriber

How Does Multi

Choice Nigeria
Provide
Evidence of
Benefit to
Reduce
Uncertainty?
 Marketing Challenges Created by
Intangibility to Service Managers

 Services cannot be inventoried, and therefore

fluctuations in demand are often difficult to
manage.
 Services cannot be easily patented, and new
service concepts can therefore be easily copied
by competitors.
 Services cannot be readily displayed or easily
communicated to customers so quality may be
difficult for consumers to assess.
 Decisions about what to include in advertising
and other promotional materials are challenging.
 Strategies to adopt
 Create tangibility: Use physical objects
that represent service that helps tell
your story.
Multichoice – DSTV Explorer
Airtel 3G Vs 4G – “Gele” Head Gear
First Bank - Elephant
Unity Bank – Parental Bond
 Strategies to adopt…
 Focus Promotion on Provider: The
service provider is more tangible than
the service itself. Usually possesses a
level of skill and expertise that
represent the service.
Bank – Experience and Training
Hospital – Consultants
School – Pedigree of teaching staff
Variable, Different, Not Similar

Heterogeneity
 Make Up Artists
Kano National
 Mena Makeover  Bimpe Onakoya
 Tafeeda’s Glamour  BM Pro
 MonAvee Beauty  T.A La Mode Beauty
Lounge  Jide St Ola
 Mekkyaj Fandy  Lolade ML Pro
 Bee-Jay  Layefa Beauty
 Bride’s Profile
 Heterogeneity
 The involvement of humans as being
responsible for delivery leads to heterogeneity
 No two providers or customers are exactly the
same. Hence service quality may vary
depending on who provides the service and
who receives it.
 Even for same provider service quality tends to
fluctuate due to emotional state – human factor
 Maintaining quality can be a daunting task
 Marketing Challenges Created by
Heterogeneity to Service Managers

 The ability of a consumer to articulate his or her

needs determines to what extent quality can be
ensured
 The ability and willingness of personnel to satisfy
those needs would also determine level of quality
provided
 Quality is also influenced by the presence (or
absence) of other customers, and the level of
demand for the service.
Because of the above, the service manager cannot always know if
the service is being delivered in a manner consistent with what
was originally planned and promoted.
 Strategies to adopt
 Staff need to be on top of their game - know
how to do their job very well
 Staff must be well motivated to maintain
high standards of service.
 Invest in high quality personnel by paying
attention to recruitment process, selection,
correct placement and training
 Evaluate satisfaction level of customers
 Pursue automation where possible
 Inseparability
 Services are produced and consumed
simultaneously
 Cannot be separated from providers,
whether people or machines
 Customers are always involved. In
essence, customers need to be present and
involved in the service delivery process.
 Marketing Challenges Created by
Inseparability to Service Managers

 Mass production is difficult and the quality of

service and customer satisfaction will be
highly dependent on what happens in “real
time”.
 The actions of employees and the
interactions between employees and
customers affect quality.
 It is not usually possible to gain significant
economies of scale through centralization.
 Strategies to adopt

 Multiple locations could be explored except for

services where customers do not mind going the
extra mile to find provider
 However, there is a whole class of separable
services which include:
(Auto repairs, maintenance, cleaning, among others)

Here, production precedes consumption and

customers do not need to be present during production
Waste, Loss of Money, Cant
be Sold at a Later Date

Perishability
What would happen to KLM Airline
income due to empty seats?
 Perishability

Perishability occurs in the following

possible ways:
 Perishability of productive capacity
 Perishability of customer experience
 Perishability of output
 Marketing Challenges Created by
Perishability to Service Managers

 Services cannot be stored for later sale or

use.
 The fact that services cannot typically be returned
or resold also implies a need for strong
recovery strategies when things do go
wrong.
 The inability to inventory services makes
demand forecasting and creative planning
for capacity utilization difficult
 Need to match supply and demand
 Strategies to adopt - Demand

 Differential pricing between

peak and off peak
 Complementary service to
engage waiting customers
 Reservation system to manage
demand level and timing
 Strategies to adopt - Supply

 Only essential tasks should be

performed during peak periods
 Engage part time employees to help
at peak periods
 Acquire facilities for future
expansion.
 Increase customer participation.
 Additional P’s - People

 Most services are provided by people

so hiring and training is key.

 There is direct relationship between

employee satisfaction and customer
satisfaction.
Additional P’s – Physical Evidence

Demonstrate service quality through

physical evidence i.e. “clueing”. Choose
what you intend to use in realizing your
intended Customer Value Proposition
(cleanliness, speed, responsiveness,
hospitality among others)
 Additional P’- Process

Companies need to choose among

different processes on how to deliver
their service.
 Restaurant – Cafeteria, Buffet, Candle
light etc.
 Catfish – Weekly and online platform
 E Branch of bank
 Bank – Bulk counters
Service Quality Dimensions
 Tangibles:The appearance of
physical facilities, equipment,
personnel & communication
materials – Iphonex Max, Tablet,
Mac Book Pro, Complete modern
tool box, State of the art
architectural design, well tailored
suits, portable projector and
powered projector screen etc.
Service Quality Dimensions.
 Reliability: The ability to perform the
promised service dependably and
accurately. Service performed correctly
on the first occasion – correct billing,
reliable internet service, minimal call drop
rates, lack of shortages in cash
withdrawn, up to date records
 “I was told I would be the first call tomorrow.
At 12.30 the next afternoon I called to ask
them when their day started”
Fixing Service Failure Due to
Reliability Challenge
Service Quality Dimensions.

 Responsiveness: Readiness and

willingness of employees to help
customers in providing prompt timely
services, a Sim swap that takes days,
Porting duration, call the experience center
and you are put on hold for hours, need to
reactivate your dormant account and it takes
a couple of hours, need to renew your
subscription and it takes almost forever…..
Service Quality Dimensions.
 Assurance: The knowledge and courtesy of
employees and their ability to convey trust and
confidence – important for services that customers
perceive as high risk or for service of which they feel
uncertain about their ability to evaluate outcomes, e.g.
insurance, medical and legal services .
 a mechanic that asks you “where is the
radiator of this car?” You ask an
Investment officer of a company – what is
this investment all about? He says “I am not
sure but I will get back to you”
Service Quality Dimensions.

 Empathy: The provision of caring,

individualized attention to customers – Call
center “I cant load airtime” –
Response “So sorry about that,
but please do XYZ” your customer
cant write in English, you help him
fill out his deposit slip.

 Service Gap Analysis Model

What the customer What mgt. thought the

Gap #1 expected Gap
customer wanted
What mgt. thought the Management’s service
Gap #2 customer wanted
Gap
quality expectations
Management’s service What was actually
Gap #3 quality expectations
Gap
delivered to the customer
What was actually What the customer
Gap #4 delivered to the customer Gap
perceives she got
What the customer What the customer
Gap #5 perceives she got
Gap
expected
Course of Action Open to a Dissatisfied Customer