In the Brexit debate, much attention has been paid to UK having some form of custom’s union with the European Union. Conservative politicians who support Brexit, fear such a union will remove the UK’s ability to make trade deals with other nations. Jeremy Corbyn speaks of a unique ‘custom’s union for goods’; different from the existing EU custom’s union which includes Turkey but which does not include Norway and the other EFTA nations.
What these statements from UK politicians shows is that very few of them understand the details of international trade. They talk of WTO rules as if they are some sort of magic bullet; not the least worst option in trade; the fall-back position; the last resort of world trade; trading terms so ‘favourable’ not a single nation in the world uses them.
Corbyn’s comment about a ‘custom’s union for goods’ is a clear indication that our politicians don’t know what they are talking about. Custom’s unions are almost universally focused on goods. They do not deal in services. Service markets face different restrictions such as compliance with professional standards and government legislation. The EU, in recent years has worked hard in recent years to remove such barriers from its single market. The EU Services Directive, is one piece of legislation that looked to ensure that service providers could operate across the bloc. This included attempts to provide a level playing field in terms of professional qualifications and standards. The Consumer Credit Directive, which was largely based on the UK Consumer Credit Act 1974, looks to create a single legislative framework for the sale of unsecured loans across the whole of the EU.
In debating a ‘custom’s union for goods’, UK politicians appear to ignore the fact that since the 1980s Britain has developed as a services-based economy. Politicians seem focused on manufacturing; they are ignoring the needs and necessary environment for service providers: Which are now the majority part of the UK economy.
Marketing services is different from marketing goods.
Services have immediacy. They are time dependent. Once an aircraft has taken off, you can’t put any more passengers on it. You can’t put any more diners in a restaurant once the sitting has finished. Once a play has started, you can’t put any more patrons in the audience. This leads to a need to balance supply and demand. Airlines and holiday firms do this by operating fluid pricing strategies.
Increasingly services are dependent on technology. They are often delivered remotely and by distance communication tools such as the telephone and the internet.
Increasingly, customers are involved in the delivery of services. For example, the business who works closely with the developer to design a website.
Increasingly, customers want a customised service to meet their individual needs. Again, a business may want a bespoke database and will employ a service provider to build it.
Positioning is about creating a distinctive place in the market for both your company and the services you provide.
This requires two decisions to be made:
- The choice of a target market: Where you want to compete.
- The creation of differential advantage: How you want to compete.
So in positioning services, you need to be aware of the particular needs of your target customer. These needs will determine the target segment of the market. You then will need to create a services marketing mix which creates differential advantage based on those customer needs.
For services, the extended marketing mix was created. This extends the 4P mix developed by Philip Kotler (Product, Promotion, Price, Place) and adds three additional ‘P’s; People, Process and Physical Evidence.
Target marketing is based on market segmentation and using positioning tools based on the needs of defined customer groups and their price sensitivity.
Using targeting tools and designing your mix for defined customer segments does not preclude sales to customers outside those groups but by targeting your marketing activity, you make best use of scarce resources such as financial budgets. targeting marketing is targeting resources on your core customers. Sales to those outside that core are a bonus.
As stated above, there are three additional elements to the services marketing mix:
- People: People are critical to the provision of services. Often the creation of a service and its delivery are simultaneous. People occupy a key position in a customers perception of service quality. Bad staff often equates to bad service so it is critical to get the right people. Training, monitoring and the REWARDING of staff is critical to good service quality. People aren’t machines so body language, tone of voice and attitude matter. Airlines spend significant time and money training cabin crew to ensure these attributes send the right message. If people enjoy their work, this often comes across in their body language. Systems such as SERVQUAL aim to eliminate harmful interactions by reducing opportunities for cognitive dissonance.
- Physical Evidence: This is the environment in which a service is delivered. It is tangible evidence of service quality. When you travel on an airline is your drink served in a plastic tumbler or a glass? When Gordon Ramsay does a ‘Restaurant nightmare’, a big element of his revamp is to change the restaurant décor. physical evidence can be changing the ergonomics of a service e.g. the layout of equipment in a gym. There was an outcry when Ryanair proposed ‘standing room only’ on its aircraft (although that was a likely attempt at PR spin).
- Process: is the mechanisms, procedures and flow of activities by which a service is delivered. Process changes such as the elimination of queuing can radically affect service delivery to target consumers and therefore differential advantage. So theme parks sell priority tickets which allow patrons to dodge queues. Airlines offer first class and business lounges. Cruise firms will pick up customers from their homes. Others such as Amazon Prime offer reduced delivery times.
In Big Ideas in Services Marketing (Berry, 1987), seven guidelines for services marketing were declared:
- Marketing happens at all levels of an organisation.
- there must be flexibility in service provision (the ability to customise services).
- You need to recruit high quality staff. You need to treat them well and communicate withthem clearly.
- You need to increase the usage of services by marketing to existing customers; customer retention is key. to keep customers you will likely need to offer service extensions.
- You need a quick response facilities for customer service and complaint resolution.
- You need to engage with new technology to deliver better service at lower cost.
- You need to differentiate your service through branding. Branding works the minds of target customers.