Product Differentiation And Demand For Marketing Services Case Study

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What are services and what exactly draws the line between product differentiation and service differentiation? How does one create demand for services and is there any heterogeneity involved? Guy Black (Black, 1951) has very well illustrated these points in his paper titled ‘Product Differentiation and demand for Marketing Services’. Going back to the definition that Marshall has given us – Services are the category of intangible things that are desired or which satisfy human wants. Just like how we have product differentiation in the goods category, there is also an aspect of service differentiation and that is where you have monopolies entering the market. Chamberlin has specifically focussed his work
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• Inseparability of Production and Consumption – simultaneous production and consumption for almost all services. Again, this point is not sacrosanct as it has been refuted by the previous author in his article.
• Heterogeneity – There is a potential for high variability in the performances of services. It should be noted that this proves to be a very serious problem in the labour intensive firms.
• Perishability – The services that are provided by the service provider cannot be saved and this has been depicted by examples of motel room, hotels etc.
Now, the literature not only talks about the unique features of services vis-a-vis products but also gives good strategy measures to tackle each unique characteristic of services which shall be depicted in a table format as below:
Unique Service Features Corresponding strategies to solve them
Intangibility Stress tangible cues
Use personal sources
Stimulate W-O-M
Create organizational image
Engage in post-purchase communications
Inseparability Emphasize on selection and training of
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The paper, in brief, has laid down a lot of hypothesis touching upon issues on strategic vulnerability, ethical considerations, resource dependence et al. It identifies the major inter-organizational factors affecting the ethics of service organizations. The willingness of an exchange partner to entertain unethical behaviour is directly related to its power, perceived level of uncertainty, in short – control of resources.
This uncertainty affects inter-organizational relationships which are likely to be highly volatile. This uncertainty will affect inter-organizational relationships. With services being very unique with specific characteristics, there is a scope of an expert power being formed in the process. For smooth inter-organizational relationships, firms need to do away with the dependence on resource and power from other

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