Abstract
Strategic marketing decisions for services are complicated by factors that distinguish services from goods. Because services are intangible, variable, and the production and consumption experiences are inseparable, trial of the identical service to be purchased cannot be offered. Services cannot be inventoried, so potential customers are lost if they are unaware of a particular service or it is unavailable during their time of need. Partially due to the difficulty of matching service supply to demand, service marketers typically assume that it is best to work toward retaining current clients, rather than focusing too much on attracting new customers. If there is an ongoing or frequent periodic need for the service, it may indeed be less expensive to maintain an existing customer relationship than to build a new one; however, for services that customers require infrequently, the marketer must find ways to build awareness and attract new customers. Just as marketing strategies for manufactured goods depend on whether the items are frequently purchased or durable, more effective service marketing decisions may be obtained by considering whether customer needs are frequent or not. We discuss these differences in general terms, then provide an application, developing an optimal promotion strategy decision model for an infrequently purchased service. We conclude that customers in the market for infrequently purchased services have particularly high needs for product awareness and purchase risk reduction, influencing strategic marketing decisions.
Original language | English (US) |
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Pages (from-to) | 40-62 |
Number of pages | 23 |
Journal | Service Industries Journal |
Volume | 23 |
Issue number | 3 |
DOIs | |
State | Published - May 2003 |
Funding
The authors wish to express their appreciation to Bob Reeds for providing data and insight. They also wish to thank Frank Bass, Amir Barnea, Rod Brodie, Susan Ellis, Renee Florsheim, Dipak Jain, Murali Mantrala, Chris Miller, Eitan Muller, Scott Neslin, Ram Rao, and Chi Kin (Bennett) Yim for helpful suggestions. The second author wishes to acknowledge computer hardware provided by NSF grant No.DMS 9005783.
ASJC Scopus subject areas
- Strategy and Management
- Management of Technology and Innovation