Marketing in Service Provider Industries by Building Relationships

Published by MBA Skool Team, Published on May 01, 2016

In recent years there has been phenomenal growth in service industries. A major portion of employment is provided is provided by service industries in comparison to the manufacturing sector. Both macro and microeconomics of the nation are affected because of the revolution in the service industry. At the macroeconomic level, there is need to update the workforce as per requirement and at microeconomics level manager are required to change the marketing strategies in order to develop a relationship with the customer. Local and one to one aspect of service marketing makes the difference. Advertising in the service industry is done majorly internally instead of hiring the outside agencies as in the manufacturing industry.

A great marketing campaign is essential to build the relationship with customers and for your success. The first step is that your target customers are aware about you, which is generally done by website as it is affordable and can convey in-depth information about your business. The benefits of hiring your services should be shown on the main page and also show how your company is fulfilling promises using testimonials. The second step is to add value to your company, which is done generally by cutting down the prices. Instead of this more services should be added so that it becomes too good that customers could not resist it also called bundling. The third step is how to attract the new customers.

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A customer who had positive experiences with will return for sure and will do word-of- mouth marketing for you. In order to obtain long term results a special offer has to be created that can attract new customers. The fourth step is to keep in touch with the existing customer because it will cost more to lose an existing customer than to attract the new customer. Opportunities to grow your business will be decreased if you are not communicating with the existing customers. A synchronize campaign to build a strong relationship can be created by providing detailed information to existing customers and ongoing offers to new customers.


Marketing mix of service is also known as the extended marketing mix. In addition to the 4P's of the product mix there are 3 more P's in the service marketing mix. Product, pricing, promotions and place are the 4 P's and additional 3 P's are people, process and physical evidence. In service industry product is intangible in nature, but is perishable, heterogeneous and have no ownership. Services can be easily duplicated and hence only the brand can set it apart from its competitors. Pricing is the most difficult in the service industry as compared to the products. Each element has to be taken while calculating cost and final service pricing is calculated by adding a profit mark-up. Service are defined by people. Many service provider industry has shifted their focus from customer service to customer satisfaction. The most critical component in the service provider industry is the process as it establishes the first connection with the end customer. Tangible elements can be obtained from the service. Physical evidence is the differentiator with the competitor in the service industry.


Internal marketing as defined by Rust is the characterization of set of activities a firm must undertake to win over the hearts and mind of the employee in order to achieve the service excellence. Marketing in service provider industry is all about the promises.


Internal marketing comprises of the activities that management engages itself in order to aid the providers to deliver the service as per promise. If promises are not met then the customers will be disengaged and will move towards the competitor firms. Marketing solutions that are applied to services can be Lead generation, email marketing campaigns, customer satisfaction surveys, meeting the demographic requirements, marketing through thank you card, marketing to past and existing customers etc.


Certain strategies are used by service industry in order to remain competitive when there is decreasing demand for its main service line are Penetrating deeper into the market, development of new or modified service, diversification and expansion of the target market. Certain issues during the development of new services are:

a. Patent: As services is an intangible, which means no patent so there is maximum chance of duplication.

b. Branding of service is difficult as there are lots of problems in maintaining the quality consistency

c. Warranty can be an issue in marketing certain services.


A number of factors which will affect the behavior of consumer in the service industry are:

1. Situational factors: Ambience of the service outlet, need to purchase and influence of time pressure.

2. Cultural factors: Under this there are various other categories are gender, age, occupation, geographical locations and social class.

3. Personality factor: Comprises of lifestyle, personality and demographic factors.

4. Psychological Factors: Includes perception, attitude and motivation.


Positioning i.e. how well the customers are able to relate to your services and can differentiate it from the competitors. Positioning can be based on certain themes:

a. Service Benefits: Focus on the distinctive benefit that the customer will get after using the service.

b. Competitive Positioning: It can be away or against from the competition.

c. Price Positioning: It is about to communicate the best value for the service, the customers can pay.

d. Quality Positioning: Based on positioning on the basis of service.

e. Leadership Positioning: It is about to inform the target customers that the service company is a major shareholder in the market.

f. Excellence Positioning: Positioning is on the basis of efficiency and performance of the firm.


There is no standardization in the local service market. The prime challenge is the fragmentation and is mostly under the control of middlemen who only determine the cost of service. In service provider industry it take time to figure out the appropriate execution process. In service provider industry it is about to maintain the balance between providers and the customers. If provider are more than the demand, then they will soon be disengaged and if customers, as the customers will be disillusioned. Single measures cannot be determined.


Characteristics of Successful firms:

1. Offering the right services which do not have a finite stopping point and keep on increasing value and ROI

2. Sales processes should be robust and must include CRM (customer management systems), Goal setting, forecast and documented process.

3. Business process tools like project management, time tracking, internal social networks etc.

4. From lead generation to customers acquired everything should be reported on ROI which can tell about their impact on the bottom-line.


This article has been authored by Reena Pal from IIM Kashipur









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