CHAPTER 23
The marketing of services
ADRIAN PALMER
Introduction
Is the marketing of services fundamentally
different to the marketing of goods? Or is
services marketing just a special case of general
marketing theory? This chapter discusses the
distinctive characteristics of services and the
extent to which these call for a revision to the
general principles of marketing. While many of
the general principles can be applied to ser-
vices, there are areas where a new set of tools
needs to be developed. Of particular impor-
tance are: the effects of service intangibility on
buyers’ decision-making processes; the effects
of producing services ‘live’ in the presence of
the consumer; and the crucial role played by an
organization’s employees in the total product
offer.
There is debate about the significance of
services to national economies, and indeed how
services should be defined. Before discussing
the distinctive marketing needs of services, this
chapter offers a contextual background to the
service sector. By the end of the chapter, you
should be able to judge the extent to which
services call for a distinct set of marketing
principles, rather than simple adaptation of
universal principles of marketing.
The development of the service economy
We have always had service industries, and
indeed there are numerous biblical references
to services as diverse as inn keeping, money
lending and market trading. Over time, the
service sector has grown in volume and in the
importance ascribed to it.
Early economists saw services as being
totally unproductive, adding nothing of value
to an economy. Adam Smith included the
efforts of intermediaries, doctors, lawyers and
the armed forces among those who were
‘unproductive of any value’ (Smith, 1977) and
this remained the dominant attitude towards
services until the latter part of the nineteenth
century. Economists now recognize that tan-
gible products may not exist at all without a
series of services being performed in order to
produce them and to make them available to
consumers. So an agent distributing agricul-
tural produce performs as valuable a task as the
farmer. Without the provision of transport and
intermediary services, agricultural products
produced in areas of surplus would be of little
value.