Page 351 - Foundations of Marketing

318 Part 4 | Product and Price Decisions

Distribution of Services
FedEx provides delivery
services and maintains websites
to track packages online.

© iStockphoto.com/DaveAlan

Marketing channels for services usually are short and direct, meaning that the producer
delivers the service directly to the end user. Some services, however, use intermediaries. For
example, travel agents facilitate the delivery of airline services, independent insurance agents
participate in the marketing of various insurance policies, and fi nancial planners market invest-
ment services. Service marketers are less concerned with warehousing and transportation than
are goods marketers. They are very concerned, however, about inventory management, espe-
cially balancing supply and demand for services. The service characteristics of inseparability
and level of customer contact contribute to the challenges of demand management. In some
instances, service marketers use appointments and reservations as approaches for scheduling
the delivery of services. Health-care providers, attorneys, accountants, and restaurants often
use reservations or appointments to plan and pace the delivery of their services. Southwest
Airlines, for example, uses sophisticated computer systems, software, and mathematical algo-
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rithms to develop effi cient routes and schedules for its daily departures. To increase the supply
of a service, marketers use multiple service sites and also increase the number of contact ser-
vice providers at each site. National and regional eye-care and hair-care services are examples.
To make delivery more accessible to customers and to increase the supply of a service, as
well as reduce labor costs, some service providers have decreased the use of contact personnel
and replaced them with equipment. In other words, they have changed a high-contact service
into a low-contact one. By installing ATMs, banks have increased production capacity and
reduced customer contact. This is an example of how banks are using technology to hopefully
improve service.

Promotion of Services

The intangibility of services results in several promotion-related challenges to service market-
ers. Because it may not be possible to depict the actual performance of a service in an adver-
tisement or to display it in a store, explaining a service to customers can be a difficult task.
Promotion of services typically includes tangible cues that symbolize the service. Consider
Transamerica, which uses its pyramid-shaped building to symbolize strength, security, and
reliability, important features associated with insurance and other financial services. Although
these symbols have nothing to do with the actual services, they make it much easier for cus-
tomers to understand the intangible attributes associated with insurance services. To make a
service more tangible, advertisements for services often show pictures of facilities, equip-
ment, and service personnel. Marketers may also promote their services as a tangible expres-
sion of consumers’ lifestyles. The California Travel & Tourism Commission, for example,

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