- Difference between product and service sales
In sales, being aware of the relationship between product sales and service sales as well as differentiating each of them is one of the best way of knowing their differences. Products and services have differences that determine the things that go on in their sales. One of the biggest differences between product and service sales is that product sales can be termed as transactional in nature. On the other hand, service sales are ongoing engagement between the seller and the buyer. A product sale is demarcated into the pre-sales activities and the post-sales activities. This means that the seller is involved in making the sales. Then there is a step of making the transaction to happen and then get involved in maintaining the customer. For this kind of structure, there are high upfront costs on the part of the vendor as well as big upfront commitment on the part of the customer. Therefore, there is emphasis on the pre-sales activities (Jacob, 2011).
For the service sales and particularly for those that have low costs to acquire customers for the seller as well as low costs in switching on the part of the customer, there is emphasis on developing relationship. After delivering the first service, the seller will then work hard to retain the customer for a long time. This means that there is a process of building what can be said to be the life-time-value. Therefore, in service sales, there is more emphasis on the post-sales activities. Services are performances and the actions instead of objects as in the case of products. Thus, cannot be felt, one cannot touch services, taste them or even see them. One cannot display or communicate services. For the customer to buy services, they can only rely on belief. For the products or goods, they are tangible. Consumers can taste, touch, inspect and sample the products before buying them. Again, in product selling, it is easy to set and stick to a budget while in service selling; one may require re-negotiating the marketing costs with the customers (Parry, Newnes & Huang, n.d.).
- Difference between marketing a product and a service
When marketing a product, it is possible to sell it to anyone. The only thing that the marketer requires to do is to ensure that they have the right demographic group whereby after doing so they can be able to sell their product to anyone who can afford to buy them. However, with services, the seller must be careful when choosing their potential customers. The marketer needs to market the service to those who can afford the service. When selling services, one requires building trust. This is because the customer does not receive a tangible thing but the promised result. Another thing is that when one is selling a service, they are also selling time. The only time spent on product is the time of creating and the product is sold without spending more time. In most cases, products can trigger impulse buying while services cannot. When marketing products, it is possible to give the customers the delivery time while for services, the service is created when the customer orders them and in this case, the delivery time is likely to differ.
In service marketing, one is personally required to have continuous marketing and interaction with the customers. If a customer does not like the company or the person providing the service, it is possible to lose that customer. However, in product marketing, the customer is not involved in making decisions about the like/dislike about the company. The customer is just involved in buying the product. Service marketing involves working to improve the relationship between the customers. Again, it is more difficult to price the service than products. At the initial stages of marketing the service, it is difficult to determine how to divide the prices of the service (Burns, 2014).
- Importance of service in the service industry
In most economies of the world today, economic progress and the future of the economies are being measured using the service sectors. In every market, the service sector plays a big role in improving competition as indicating the economic growth at global level. Service sector is able to consolidate competitiveness in the developed economies as well as assuring social welfare in developing economies. According to Lee, Ribeiro, Olson & Roig, (n.d.), the service sector has been the only sector that has grown and provided new employment opportunities for the last two decades. For instance, major growths have been indicated in finance, business, and commerce, hotel and catering services. This has made Europe to make the service sector as strategic sector for the European Union new Employment Policy. Another example that illustrates the importance of service is the United States knowledge-intensive industries. These industries are today the core function of the U.S. economy. Almost 76 percent of the activities in USA represent services and 80 percent of jobs in U.S. are in service industry.
In many economies, the level of development determines importance of services especially for export performance. As the economy move from middle-income range to the upper-income range, various service sectors such as private services and trade, the transport service as well as the communication services becomes some of the most important. This means that increase in the level of development, increases the employment shares in services. At this time, there is an increase in indirect labor the manufacturing sector and this labor is for those who are not involved in production activities. The level of development is also attached to the service component of the exports. In high-income economies, there is a high level of embodied services in their exports (Francois & Reinert, n.d.).
- Importance of service in the product industry
In many organizations, service is one of the major factors in their success. According to Karmakar, 2004, the main cause of service revolution is technology. Through technology, information is standardized, it is built to order, products assembled from components and eventually the product is taken to the customers. The whole of the process resembles the one used in manufacturing. In this case, the service is commoditized, resulting to greater efficiency while lowering the costs as well as using more automation. For instance, McDonald’s have revolutionized food provision service in U.S. by making reliable foods. In this manner, the company is combining the products and services. The lean manufacturing in Toyota has been able to make the company respond to the new conditions as well as focus on long-term impact on customer value.
Many product organizations depend on the services from the service industry in the production of their goods. For instance, most technical services assist in the production of products. Technology such as mobile phones, computers, internet and others are services that support product industry. By using internet, experienced users can be able to provide technical support in production of goods and services by providing advice and solving problems in production centers. When the products are produced, they must be shipped to the market. In this case, transport services are required to take the goods to target customers. Communications services are important in manufacturing set up. Internal organs in manufacturing organizations require communication system to be able to mange production and connect with the external environment. Therefore, service industry is important in making the operations of the product industry to be successful. In most cases, many organizations are involved in the combination of products and services (Francois & Reinert, n.d.).
- Link between customer satisfaction and quality in services
The main objective of any organization is to maximize profits. By increasing sales, organization is set to increase its profits. One of the major factors of increasing sales is customer satisfaction. Customer happiness indicates a sign of customer satisfaction and it is one way of evaluating the quality of services provided to the clients. Quality of the service is one of the things that consumers seek in any offer. Service quality determines the level of customer satisfaction. According to Parasuraman et al., (1985), if the customer perceives that the quality of service provided is high, it leads to customer satisfaction. Customer satisfaction is determined by the quality of the service provided by the service provider.
According to Baker and Crompton (2000), satisfaction is customer’s personal experience in relation to customer’s expectations and the actual service received from the service provider. If the service provided exceeds the expectations, then they offer their royalty to the business. In this case, the service quality becomes a component of satisfaction. Organizations that provide superior quality have satisfied customers.
Baker and Crompton (2000) asserts that the quality of service indicates their perception as well as the current level of customer satisfaction that they feel after consuming the service compared to the last service that the customer consumed. Therefore, satisfaction becomes intermediary between perception of the service quality received earlier and the present perception. Therefore, customers are able to assess the quality of service provided to them by the service provider. This means that the customer satisfaction with the level of service affects the formation of the perceptions of the customer regarding the service quality. When the customer purchases the service, it is possible for the customer to assess the service quality.
- Link between customer satisfaction and quality in products
The quality of product is gauged by several characteristics such as performance, conformity, reliability and durability as well as the customer-perceived quality. Customer satisfaction can be said to be the feelings of the customer after using the product. When the quality of product is high customers experiences positive emotions and the level of satisfaction is high. In the same manner, when the quality of product is low, customers have negative reaction. They have negative emotions and the level of satisfaction is low.
Quality alone does not determine satisfaction of the customer about product. Customers have value for the quality of conformance than the quality of design. According to Bahnan & Meirovich, (2008), when the product exhibit a high quality of conformance and a low quality of design, customer satisfaction is positive although not high. When the opposite happens, customer satisfaction is very low. At the same time, sometimes customer will gauge the quality of the product by price. Sometimes customer may use information available including the price to gauge the quality of the product. Sometimes products are sold at low price because they are of low quality. Therefore, when the price is low the quality of the product is low and the satisfaction that the customer will derive from that product will be low. Other times, products are sold at low quality to be able to penetrate the market. This means that the quality is high, the price is low and the level of satisfaction is high.
- Role of customer relationship management in service industries
Customer relationship management is the system of nurturing the organization to interact with the current clients as well as the future customers. The system makes use of technology to manage the sales activities, marketing activities as well as the technological support within the organization. Because of the inevitable role of the service sector in the world economy, customer relationship is very important. CRM in service industry play a vital role in retaining customers. Service is usually an intangible good. It includes products such as advice, experience and many others. Therefore, service sector is very wide including the health care sector, banking sector, insurance sector, legal sector, restaurant and hotels, education and many others, (Milovic, 2012).
Service industry requires a continuous creation of customer relationship for nay organization to succeed. Therefore, services provide the principle of CRM with opportunities to find, know and retain customers. In service industry, CRM is effective especially when it is customised to the product. Because one cannot separate the purchase of service and its consumption, the sales function in service organizations is important because they are close to the product. Therefore, it is important to manage the relationship between the sales team and the customer. CRM offer a form of standardization in service industry. This is because; it is not possible to have an exact service twice. CRM helps in isolating variables defining the service differences (Greechie, 2008).
- Role of Customer Relationship Management in product industries
The aim of CRM is to find, to attract and win the new clients as well retain those that are already in existence. Because of increased competition resulting from globalization, the cultural opening and the spread and companies spreading all over the globe, there is presence of multiple products and consumers are provided with more purchase options. This has caused the companies to increase the focus on customers (Chen and Popovich, n.d.). According to Nguyen, (2007) "the success of the organizations in achieving their goals depends largely on the efficiency of management of its relations with customers." To achieve this objective, customer relationship management (CRM) helps the company to build their names and products in the minds of their customers. For instance, a customer may prefer drinking a Coca cola soda, such individual, will hear the mention of a soft drink and will only remember coca cola because the name is strongly in their mind. Such people will remain loyal to the Coca cola brand. In product industry, CRM can be used to create dialogue with the company customers integrated across all important points. In this case, customers will benefit will benefit from customized products. The company will on the other hand benefit from attracting customer loyalty and they will be able to put their focus to the profitable customers only (Berry, Zeitbaml, and Parasuraman, 1990).
- What are the competitive strengths of the product industry versus the service industry?
In product industry, the industry is not labor intensive as in the service industry. In fact, it is hard to scale production in service industry without adding people. In product industry, it is easy to control the cost of products. This is because it is easy to calculate the cost of producing the product and hence easy to control the market price of the product. Products can easily be standardized during the development and production stages. In service industry, it is not easy to control the cost. Because products are tangible, marketing the products becomes easier than marketing the services. Customers can touch the product and the way it is packaged when presented to them might compel them to make impulse buying. This is not possible in service industry (Lorette, 2014).
Much as product industry and service industry seems to differ, the forces driving decision making in both industries seems to be the same. For instance, CRM can be used in both industries to manage sales activities. Organizations needs to understand their customer segment whether in product industry or service industry in order to be able to know the best methods to reach them and how to market their products or the service that they offer. For instance, although product marketers require creating less customer relationship than the service marketers do, they cannot ignore the fact that they require to know how satisfied the customers are with their product and therefore work on the ways of getting competitive advantage. Service industry seems to be harder when doing business. However, the industry growth around the world provides a better picture of the future growth of the industry.
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