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Goods and Services: Strategic Marketing

Introduction

The world of the present day is so fast that people living on this planet are becoming more sophisticated in case of consumption, whether it is goods and service and for this reason marketing is becoming intricate day by day. Antagonistic marketing tools and distinguished revolutionary advertising mediums have become so vastly usable that marketers nowadays use marketing as an arm to capture market and customers. The marketers are now so effective that they are using differentiated techniques to market goods and services because the nature of consumption and the customer attitude towards goods and service are different. But there are arguments towards the view of marketing among the marketing experts. They are divided in two schools, one is saying that the marketing of goods are significantly different from marketing of services and the other are saying that the strategic considerations of marketing of goods and services are similar. This essay would discuss what the facts behind these two opinions are and also try to find out which one is correct. To do so this paper would first provide some brief thoughts about the nature of goods and service.

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What are Goods?

Goods are those marketable elements which have tangibility, physical appearance, storable and which customers can consume later after the buying of it. The most marketing effort has been given to goods and the production of goods comprises most endeavors in almost all countries of the world. Goods are of different kinds including cars, refrigerators, television sets, machines, mobile phones, clothes and many other things which can be fresh, processed, canned, frozen and begged. There is a great deal of goods which basically based on the stage of production process and the use of the product. In case of production process it may be raw materials, Intermediate goods and finished goods.

From canned water to airplanes, mobile phones to food all are examples of goods. To make the concept clear a company like “Danisco Limited” can be used which is a product manufacturer producing food ingredients and many other food products including dairy products.

What is service?

Services are the economic activities which produce no physical product or construction and which outputs have no tangibility are referred to as services. The services are consumed instantly where it is delivered and has no way to preserve, store or remain the scope for future use. Services add values to the customer’s effort and consumer’s service in the form of comfort, convenience, amusement, timeliness and many other ways. Service providing entities are now widespread to the whole world and there are many services like work of airlines, barbers, car rental service, hotels, maintenance and repair, banking and the service of physicians, doctors, lawyers, engineers, programmers, accountants and many more. Services are the output of the business process which ensures the fulfillment of some needs of consumers without any physical appearance of the output. Services need marketing and promotional efforts also because it has no physical appearances. Consumers find it difficult to find out the best service as services has the lack of tangibility. As an example the airplane service rendered by Ryanair is a service.

Significant differences between goods and service

From the above discussion the difference between goods and services are clear enough. Service has been distinguished from products for some of characteristics service and these are given in the figure bellow

The difference between goods and services
Figure 1. The difference between goods and services

The first distinguishable nature of service is the intangibility where goods are quite opposite. Services are the actions and performance of the service providers rather than giving objects. For this reason service can not be seen, felt, tasted or touched comparing with goods. This nature of services generates some exclusive challenges in its marketing services. For this characteristic, services can not be inventoried and thus this is to predict future demand as well as to act accordingly to the demand is impossible in this case. Again the patent of services is not possible for this reason and so copying of the service elements can not be prevented. Besides this characteristics of service restrict to display it and to directly communicate with the consumers. In case of consumers the assessment of quality and the possibility of meeting their demand are almost impossible. For example Ryanair has aggressive marketing for their services but as this service has no tangibility consumers can not pretend about the service rendered by Ryanair. Ryanair can not give proper service if the passenger numbers are huge as because they can not store their service. But when considering about Danisco, they can store their products as inventory and can use them for future fluctuation in demand, they can advertise what they are going to sell because their products have tangibility.

Heterogeneity means the dissimilar nature of the similar services. Different service providers provide similar type of service but there exist differentiation, not two services are precisely alike. Consumers think that the service is the employee who delivers the service. In a single company two different people will deliver the same service in two different manners. For example two cabin crews of Ryanair will treat the passenger quite differently in a flight. Besides their performance of one day will certainly different from other days. The heterogeneity is also similar in case of consumers as no two customers are alike. Each customer has different demands and different experiences considering the service. That is the human interactions are much more heterogeneous in case of service that it is almost impossible to maintain a stable performance in case of rendering service. For this the challenge of consistency in service quality is challenging. In case of products the quality of the products can be easily control but for the heterogenic nature of the service it is almost impossible.

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Services are consumed in the place where it is produced and delivered. The Ryanair flight provides conveyance service over air but the service can not be consumed before boarding the flight. In case of goods, most goods are produced and then sell to retailer and consumers buy it from the retailers. Consumers consume the product according to their preferable time. The food ingredients produced by Danisco can consumable after many days of buying it. But the services have not these characteristics. For this nature of service consumers have direct attachment with the production of the service. In many cases they take part as an important part of service production. Simultaneity brings the possible interactions between the consumers who can share each other’s experiences about the service. In Ryanair flight one passenger can express any opinion about the service of the company and other passenger thus can have the chance to get knowledge. In case of service for this nature of providers think themselves as an essential and integral part of service. The marketing implication of this characteristic of service is the mass production of service is impossible for it. It brings the real time factor of consumption as the quality of service and the customer satisfaction mostly depends on the situation of when it is delivered. The passenger who is flying firstly in the flight can become dissatisfied with any one bad incident happening inside the flight. In such case the actions of employees like flight crew or the pilot and interactions with the other passengers are critical. This real-time factor makes the marketing of services challenging but the advantage it brings is to design customized services for different customers which is impossible in case of goods. Danisco can not offer different products for the different customers as their products are similar all the time.

Perishability means the lack of the convenient store, save, resale and returned. Considering the dissatisfied consumer who is not happy with the service of Ryanair, it is impossible for him to return after buying the service or he is not capable to resell of the service he has experienced. What he can do is to just keep apart from flying with Ryanair in future. Goods can be stored, saved and can be saved for future use where it is impossible in case of services. Products of Danisco can be stored at home by a consumer like milk can be stored in the refrigerator. But because of the Perishability of nature service can note be. Thus service providers have no chance to inventory. Perishability makes marketing of service difficult because it needs demand forecasting and creative planning with careful control. The inability of return or resold drives for intensive management of recovery plans when the service will fall. Where in case of product the defective items can easily identified and consumers have the ability to return it. Again, they have the ability to resell the product to any one who wants to buy it.

Significant differences between marketing of goods and services

As goods and services have some clear and major differences, marketing of these two will be different. Marketers of goods and services have to design their marketing programs to keep the differences stated above in mind. If the marketing mix is considered, the significant differences between marketing of goods and services will be clear.

In case of marketing mix of goods, there are four elements to be assessed and these are demonstrated in the following diagram:

Marketing mix of goods
Figure 2. Marketing mix of goods

Product means the physical appearance of the goods produced by a firm. Product has its size, color, fragrance, weight and the overall packaging of the product which will attract or pursue the customers to buy the product. Product is also meant for the shelf presentation and the attainment of unique selling proposition of the products. For example Danisco has different food products and the packaging of the foods is the product characteristics of the goods. In case of service the quality of service delivery, the services cape in which the service is to be delivered and the benefits brings by the service offering.

Price is the convenient cost benefit analysis done by the consumers after the consumption of the product or the service. After purchasing a product or service a customer tried to get the maximum benefit from it. For example a passenger in Ryanair always tries to get the best service beside the cost he has to incur for the traveling through the Ryanair. Besides a customer who buys a food ingredient from Danisco always try to get the better quality according to the price of the foods. In such cases, the cost associated with the attainment of the service or the product is a function of some other costs like conveyance cost which incurred due to the distance between the store and the customers resident. The mental and physical effort incurred by the customers to get the service or the good and many more. These costs and the benefit rendered by the good or the service is being assessed by the customer and if the customer becomes dissatisfied, he/she will never consume the good or the service later.

Place is the environmental consistency regarding the delivery process of the goods and the services. Both the goods and services are being provided in a place from where the customers get it. In most cases it is a store or an outlet. For example, the customer who wants to fly in a Ryanair flight must have to collect the tickets from the Ryanair counter. This counter is the place element of marketing for the service provided by Ryanair. The internal decoration of the counter, the behavior of the counter personnel and the neat and clean characteristics of the counter will attract any customers. If the place from which a customer can get the good service is situated in an area which is difficult to access or much remote from the potential market segments, the placement of the product or service is said to be foolish according to marketing consideration. For this reason, Ryanair has their counter within the airport.

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Promotion is the marketing effort to introduce the products or the services with the potential customers and to attain their attention. For promoting a product or a service there are various types of tools are available. TV and radio advertisements, leaflets, billboards, banners, online advertisements and newspaper advertisements are the key promotion tools used worldwide. These promotion activities are largely affected by the consumer preferences like the worldwide expansion of web and internet is now forcing marketers to use this media as an advertising tool. For example Ryanair has the tendency to communicate their new offers through TV and online advertising. The promotion of a good is much easier than service as the goods have the physical appearance.

These four elements of marketing mix are common in both product and service. But the difference between the marketing consideration between product and service is the additional three elements for service marketing mix and these are:

  1. People
  2. Physical evidence
  3. Process

So the elements of marketing mix for the services have presented in the following figure-

People mean the human actors who contribute to the service delivery process. As the human interaction within the service delivery is more important in case of service, people are considered an important factor of service. The service provider influences the customer’s perception and the other employees help to build positive image about the customers. The third types of people are the other customers who come to buy the service. A customer can influence the buying behavior of other customers. For example, In a Ryanair flight, the cabin crew and the passengers both are important for the service to be delivered properly.

Physical evidence of service represents the tangible elements which facilitate the service. These elements are considered as supplement to the service but not the actual service. For example the brochures or prospectus provided in the Ryanair flight is the tangible representations of Ryanair. Other physical evidences of services can be the letterheads, business card, financial reports and any type of sign, symbol or equipments.

Process is the mechanics, procedures and the activities done to complete the service operation which brings the credibility, consistency and transparency of the service provided by the service providers. Process includes the steps within the service delivery. Every step in the service delivery is important because if one step falls the entire service delivery would be disturbed. In this case the service delivery is quite different from the product delivery.

Strategic considerations related to marketing of goods

In the marketing of goods or products, some strategic considerations have to build according to the type of business and image of company that it wants to build up for the targeted customers. Some important strategic conditions of marketing of goods are described below:

  • Developing marketing and promotional tools: The products are described carefully to the customers in terms of benefits of pricing, convenience, location, quality etc. In the promotional tools should be presented as benefits of products to the customers, not according to the business.
  • Defining Target Market: When the products are manufactured, then it must be focus on some specific groups of customers, also known as target market. Kotler, P., & Keller, K. L. (2006) pointed out that the target market can be focused by some strategies, which are expanding current consumers, improving new-products in new markets, as well as expanding existing products in new-market;
  • Analysis of Competitors: In the strategic conditions of competitors, the customers of competitors, similarities and differences of products with competitors, strengths and weaknesses of competitors, pricing of competitors’ products, quality of their products are analyzed in these strategic considerations.
  • Analysis of coworker: The analysis of potential coworkers’, related with organization, the resources bring to the organization, cultivation of relationship with competitive organizations.
  • Analysis of Pricing: Pricing is another important factor to be considered in the marketing of goods or products. There are several factors, which are influencing pricing of products. If the or4ganizaton is going to introduce in the new market, then the pricing must be relatively low comparing with competitors’ products. The changes in “Competitor Pricing” also has a major effect of own prices of products.
  • Approach of Sales Marketing: According to the sales of products, the sales marketing plans is considered with target market, initial contacts and follow up initial contacts, presentation and close sales. The accomplishments of total productions for customers are sold with marketing programs tools.
  • Approach of Advertising and Promotions: In the advertising and promotions of marketing products, it would be focused on the target market, features and benefits conveying to them about products, methods and media used to convey, responsibilities of related employees, and budgetary plant for advertising and promotions with using appropriate tools.
  • Conducting Appropriate Production Planning: Kotler, P., & Keller, K. L. (2006) also argued that in the strategic considerations of manufacture planning, the implementation & improvement of a variety of production systems are described properly, but has to have detail description about each step of manufacture planning in the operations or management-planning of programs;
  • Conducting Appropriate Distributions Channels: The distribution channels matter critically in the distributions of organization’s products or goods to the specific target markets. It is mainly conducted with the help of operational process of organization, but specified in the strategic decisions of marketing too.
  • Designing Budget of Products: In this consideration, the products or goods are needed to develop basic budgets for product design and marketing, setting up pricing policies, and overall building up marketing considerations about the products in the target market is considered in terms of financial ability of the organization.

These are the main strategic considerations, which are used in the marketing of goods in the market with proper focus and development to branding relationship in the competitive market.

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Strategic considerations of marketing of services

The marketing of services are different from goods according to market analysis in context of target customers, different services developed in market, customers’ preferences in service choices, competitors’ action in doing different services, pricing methods, and distribution of services toward the selected customers’ group. There are some similarities with products in terms of marketing like, define target customers, analysis competitors, using promotional tools, using pricing methods, and more, But in these sections of considerations, some differences also raised, which are discussed below:

  • Specific Target Markets and their needs: In the specifications of target market by the service organization, there are some differences from products in the selection of target market. The target markets are not determined with the location or availability, but also the need of services of customers for any specific considerations. The service organization must satisfy the target customers and have to attract continuously for services to being successful in business.
  • Describing each of target market: In services, the customers are most and major elements of the business. For this reason, the target markets are described with the proper customers’ profile on the basis of need of services to the group of people, like demographic information, regional or cultural factors related with them.
  • Ongoing Promotions: The service organizations must have to consider the ongoing promotions not on the advertising or other promotional tools, rather than on public relations, sales and customers services, which are directly related with the customers’ relationship with service provider.
  • Major Competitors: Competitors of services are more critical to analysis than the goods of marketing. The service organization has to focus on the different services provided by the competitors, their relationship with customers, their market positioning and their brand image toward the target customers of the service organization.
  • Market Trends and Styles about services: Services are most sensitive in terms of deliverability and consumption of services is occurred in the same time. The customers’ impressions towards the services are important and considered after they are consuming or having at the time of service given to them.
  • Conducting Customers Services with Proper Communications: The services provided by the organization, have to select with the proper customers analysis and communications made between them for giving effective reach of target market. The links of customers are important in terms of customers’ feedback in accessibility and availability of services to them.
  • Customers Satisfaction of services: In goods, marketing is important in terms of quality of produced goods are critically judged by the customers, but in services, customers benefits and satisfaction at the same time is important, when the target market is consumed or had the services.
  • Preparing Budget for Services: Budget or financial requirements are most important in both services and goods in marketing them into proper target market and to get efficient benefits from the success of the service organization.

These are the main considerations, which should be followed by the service organizations to gather and have the market in competitive advantages and cover the total customers group of services in the market.

Comparing the strategic considerations

The strategic considerations of both goods and services, it is differentiated the marketing decisions and other specifications of them. From the strategic considerations, some similarities between products and services are identified, which are describing meaningful stories of marketing about products and services, marketing leaders act as an adviser for the customers and organizations, and building emotional connection of brand and customers. These comparisons of similarities of products and services are described below with the help of example of Danisco (Products) and Ryan- Air (Services).

  • Measurable: Both goods and services benefits are quantitative and worth measurable to customers, competitors, third parties and other groups of people related with organization. Target customers of both are relying on trust and credibility of the brand of goods and services. For an example, Danisco and Ryan Air both have brand positioning towards target customers and other groups of people.
  • Target Oriented: Products and services are both target oriented in terms of defining group of customers, competitors, market and other factors. Such as, Danisco and Ryan Air both have targeted the lower income but maximum groups of customers in their services or goods to be consumed.
  • Offer Oriented: For attracting new customers or holding existing customers, both products and services are focused on the specific offer oriented to the target market, like, Danisco and Ryan Air both are focus on the pricing compromising of goods and services.
  • Inspirational: The goods and service organizations, the marketing managers of both are focusing on attention, interest, desire and action. By gathering these, the marketers can have support, loyalty, devotion and time effectiveness from the success of inspirations of customers. Danisco and Ryan Air both have inspired by the maximum numbers of customers having their goods and services.
  • Personal Attachments: For both goods and service organizations, the personal attachments with the target customers are most important factors to be considered as a successful organization in the competitive market. Danisco and Ryan Air are both good example of having personal attachments of goods and services with their customers.
  • Powerful: In the successful marketing of goods and services with appropriate communications tools, the marketing towards customers are powerful and efficient to capture the maximum market. For Danisco and Ryan Air, both have powerful marketing with proper communications and media tools for attracting customers.

Conclusions

It is clear that the strategic considerations about marketing of goods and marketing of services are similar but the different nature of the goods and services are creating differentiation in the marketing of goods and service. Some strategies are applicable to marketing of both goods and services but applying strategy is not the only way to capture a good market share. If the marketers fail to judge the characteristics of what they are trying to sell and also not succeed to find the proper strategy fitted with the characteristics, the marketing efforts will bring loss only. So, it can be said that though the strategic considerations are similar, marketing of goods and services are not the same because the characteristics, marketing identity and consumer preferences are different for goods and services.

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