602 The Marketing Book
associated with many public utility services
means that it is unrealistic to expect two
companies to compete. More importantly,
much investment in services infrastructure is
fixed and cannot be moved to where market
opportunities are greatest. While a car manu-
facturer can quite easily redirect its new cars for
sale from a declining market to an expanding
one, a railway operator cannot easily transfer
its track and stations from one area to another.
The immobility of many services can encourage
the development of local monopoly power.
Promotion
A well-formulated service offer, distributed
through appropriate channels at a price that
represents good value to potential customers,
places less emphasis on the promotion element
of the marketing mix. Nevertheless, few ser-
vices – especially those provided in competitive
markets – can dispense with promotion
completely.
Although the principles of communication
are similar for goods and services, a number of
distinctive promotional needs of services can be
identified, deriving from the distinguishing
characteristics of services. The following are
particularly important:
The intangible nature of the service offer often
results in consumers perceiving a high level of
risk in the buying process, which promotion
must seek to overcome. A number of methods
are commonly used to remedy this, including
the development of strong brands,
encouragement of word-of-mouth
recommendation, promotion of trial usage of a
service, and the use of credible message
sources in promotion (especially through
public relations activity).
Promotion of a service offer cannot generally be
isolated from promotion of the service provider.
Customers cannot sensibly evaluate many
intangible, high perceived risk services, such as
pensions and insurance policies, without
knowing the identity of the service provider. In
many cases, the service may be difficult to
comprehend in any case (this is true of pensions
for most people), so promotion of the service
provider becomes far more important than
promotion of individual service offers.
Visible production processes, especially service
personnel, become an important element of
the promotion effort. Where service
production processes are inseparable from
their consumption, new opportunities are
provided for promoting a service. Front-line
staff can become salespeople for an
organization. The service outlet can become a
billboard which people see as they pass by.
The intangible nature of services and the
heightened possibilities for fraud results in
their promotion being generally more
constrained by legal and voluntary controls
than is the case with goods. Financial services
and overseas holidays are two examples of
service industries with extensive voluntary and
statutory limitations on promotion.Place
Place decisions refer to the ease of access which
potential customers have to a service. For
services, it is more appropriate to talk about
accessibility as a mix element, rather than
place.
The inseparability of services makes the
task of passing on service benefits much more
complex than is the case with manufactured
goods. Inseparability implies that services are
consumed at the point of production; in other
words, a service cannot be produced by one
person in one place and handled by other
people to make it available to customers in
other places. A service cannot therefore be
produced where costs are lowest and sold
where demand is greatest – customer accessi-
bility must be designed into the service produc-
tion system.
While services organizations often have a
desire to centralize production in order to
achieve economies of scale, consumers usually
seek local access to services, often at a time that