Abstract As an industrial designer working for a design consultancy or design agency, you are selling a service rather than a real product. Marketing research and literature however are generally focusing on the marketing of products. A literature study has been performed to research how the marketing of service businesses like design agencies differ from regular product businesses. Differences between products and services, the purchasing behaviour of clients and current marketing situation of design companies resulted in a general advice on how to market design companies.
Most important differences between products and services are that services are intangible, the production and consumption are inseparable and there is a lack of ownership. Despite the differences, general marketing knowledge is still applicable in service marketing, i. e. the core of creating added value. However, the focus on the means to achieve this may be different in services. Clients of service companies make their decisions based on trust, reliability and experience. The perceived service quality is much more important than pricing.
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As every employee in a service company is a salesman and helps to build this reliability and brand image, the internal communication and human administration should fit with the communication and positioning to the outer world. Key words Service marketing, design company, purchasing decisions, competitive advantage 1. Introduction Literature on marketing is generally focussed on the marketing of products. Industrial designers working in a design company, like a design consultancy or agency, do however sell a service instead of a real product.
This service is for instance providing professional advice on design directions or designing (a part of) a product. The amount of service firms has grown rapidly the past decades and also more and more large industries leading firms are turning to service support as a way to achieve sustainable competitive advantage (Geoffrey et al, 1993). Despite this growth in service offerings, research and education on marketing still focuses mainly on product marketing.
In marketing a service offering, communicating the benefits compared to competitors might be more difficult than for real products, where product characteristics are measurable and clearly communicated. Building a trustful bond with the customer and having an attractive product portfolio may be factors that are more important for service businesses. Both parties agree before hand on the price of the service. But how do clients make the decision for a design company? In this research information will be gained on the purchasing behaviour of the customers and on the sales behaviour of the service businesses.
What is most interesting for the customer, the price, the time, the quality, the commitment? There will be focused how clients make purchasing decisions and how a design company can use that information to successfully market their service. Are general corporate and business strategy models for product businesses also valid for service businesses? What is recommended when promoting/marketing a service, like a design consult? Research in general service marketing is used to create a solid base of knowledge in this area.
Then there will be focused on design companies more detailed. Main research question: How does the marketing of a service business like design agencies differ from regular product businesses? Sub research questions: What are the differences and similarities between products and services? Which factors are important for clients when purchasing a service? What are useful marketing tools for service businesses to gain a sustainable competitive advantage? 2. Method A literature study has been performed to find answers to the research questions.
Articles and books that treat the subjects in general are combined with more in-depth researches about one single aspect in service marketing. Both literature on service marketing in general and literature that address design companies in particular are used. Besides articles also several case studies on design companies are used to apply and compare the theory with the reality. 3. Results 3. 1 Products vs Services It seems to be obvious that products differ from services. However, pointing out the exact differences and their consequences for the marketing is not that simple.
This paragraph will treat what service marketing means, what are the characteristics of services and the differences and similarities towards products. 3. 1. 1 Service as core business or added value? Gronroos (1978) states an important confusion often made when talking about service marketing, which he calls the ‘faltering service concept’. With this he means ‘no distinction made between services as objects of marketing and services as marketing variables (i. e. as means of competition). ‘ However, there is a large difference between these two types of services. In the ormer, service is the core of the business, where in the latter the core business is a physical good and the service is added as a way to achieve competitive advantages. When talking about service marketing in this paper, services as objects of marketing is intended. 3. 1. 2 Characteristics of service marketing When comparing products and services marketing, several differences can be seen. The most remarkable and important difference is the intangibility of services, which makes them more difficult to evaluate. Customers cannot feel or see a service beforehand like one can do when purchasing a product. (Gronroos, 1978)).
Other characteristics of services that differ from products stated by cooper and Jackson (1988) are the inseparability of production and consumption, heterogeneity (non-standardisation) and perishability (cannot be inventoried). The inseparability of production and consumption is the fact that a service is consumed as it produced. Therefore the producer and seller of a service are generally considered to be the same person. This makes the production and marketing also very contiguous and interactive processes. Another characteristic of services is the lack of ownership and transaction of ownership when dealing with services (Gronroos, 1978).
This means after the purchasing of a service, the customer does not own anything, but the right to use things is given. This right is often expressed in symbols like tickets, certificated and value coupons. 3. 1. 3 A new marketing mix needed? The above-mentioned characteristics that distinguish services from products seem to call for a special (new) service marketing mix. However, there are also numerous similarities that make some marketers believe that marketing tools used in goods industries will also work for service firms. Geoffrey, et al. 1993) states it is a common misconception that marketing strategies of services are inherently different from those of products. Despite the different characteristics he says the core of business-to-business marketing of services is similar to that of products: decisions should be made on pricing, promotion, distribution and new product/service development (although the emphasis might be placed on specific parts, the variables are the same). Also a deep customer understanding is required in order to satisfy their needs and wants better than competitors.
Providing value to the customer is the driving force to have long-term success. This is keeping with the primary foundations of goods marketing. Most researchers do agree that these fundamentals of marketing are equal, but do not agree that therefore the execution of a marketing mix will also be the same for products and services. In his article, Gronroos (1978) says that together with the earlier mentioned faltering service concept, this is another confusion of service marketing and he says there is enough empirical evidence to prove the opinion that goods and service marketing require the same tools is wrong. Marr, et al. 1996) researched the perceived importance that employees of engineering consultancies have on activities as PR, promotion and competition and he compared it with the actual successful implementation of these aspects. The research showed that despite the perceived importance, the engineering consultancies do not succeed to achieve a successful marketing mix. This also confirms the need for a special (new) set of marketing tools and methods for service firms. It should be said though that not only the lack of a sufficient marketing method is the reason why the consultancies do not succeed in implementing a successful marketing strategies.
Also organisational dilemmas (no separated marketing department or marketer is present) and ignorance and a lack of specialists in this field can attribute to this. 3. 2 Purchasing decisions for services Approving the view that service marketing requires an adapted marketing mix, what are the most important focus-points and strategies to successfully market a service firm? Value creation is known as the main driver for a company to exist. In goods marketing, the added value is often measurable: transformation of raw materials into parts or the assembly of several parts into a complete product etc.
However, the value of a service is based solely on the customer’s perspective (Forbis and Mehta, 1981). This asks for deep understandings in the way customers attach value to a service and which aspects they perceive as important. Geoffrey, et al. (1993) researched how customers evaluate services. Twenty criteria are clustered into four domains: vendor criteria, service/product novelty criteria, service/product financial criteria and service/product uniqueness criteria. In services the vendor criteria were evaluated as the most important, followed by novelty criteria.
Especially the vendor criteria are evaluated more important for services than for products. Criteria that are rated the highest are ‘reliability’ and ‘responsiveness to customers demands’. Customers want a reliable service offer. Not only the promise of reliability, but also proof of it. Secondly, customers are not interested in radical changes. “Ease of integration and operation, and compatibility are likely to be of greater importance than technical sophistication. ” Thirdly, “experience and reputation” and “personnel competence” are rated as more important when dealing with service firms. Geoffrey et al, 1993). In addition, Parasuraman et al (1991) clustered the service expection-perception along five generic dimensions, which connect to the above-stated aspects: (1) Reliability, (2) Responsiveness), (3) Assurance), (4) Empathy and (5) Tangibles. Besides the differences, services seem to be evaluated generally comparable to physical goods, thus values in marketing goods, like accessibility and brand image, will largely also be applicable in service marketing. Focussing more on design companies, customers often do not have a high budget for design engineering and consultancies.
It is regularly not part of the long-term strategy. An order is therefore often an immediate need of the company. Although it getting more recognized, still al long way to go to convince clients design is a real investment, not a cost. (Preddy, 2004) 3. 3 Current situation of marketing in design consultancies Focusing on the current marketing situation in design agencies and other engineering consultants can give better insights in the points of improvement. Especially in smaller consulting agencies no separate marketing department is present. Often times the marketing tasks are included in the management responsibilities.
As the management is regularly not marketing oriented, the marketing is treated as a side activity besides all other management tasks. This results amongst others in less than a quarter of the researched engineering consultants have written a marketing plan (Marr et al, 1996). The main marketing activities performed by the consultancy are credit checks on competitors and promotional activities (advertising and public relations). Marr (1996) also discovered most service providers are often competing on price. This results in a reduced profitability and consequently a lower quality of the service, which is both unwanted.
Better would be to compete on the perceived service quality by the customers. This would however not only asks for a change in marketing strategies of the service providers, but also a change in the customer behaviour. Besides being price-focussed, most design consultancies are still product-focussed. (Preddy, 2004). Design companies often have a ‘wait-and-see mentality’, where they wait for orders from companies. Of course the design companies will perform activities to get companies to outsource the task to them, but in these marketing activities they only try to sell their existing service.
According to Preddy, it is better to invest time and energy in thinking about the developments in the services in order to meet the clients’ continually changing needs. Being more market and consumer orientated will help design companies to be prepared for future developments. Finally, currently most design consultancies are all rather undifferentiated from other competitors, as they are all positioned around the same attribute, which is ‘innovation’ (Lerner, 2009). This capability of the company is due to its intangibility very difficult to be recognized by potential clients. . 4 Advice on business strategy when marketing design companies Now insight in generated in services in general, the clients wishes and the current situation, an advice can be given towards the marketing of design companies. The main focus is how the company can influence the perceived service quality. This paragraph gives four advices on the more overall strategy of the company: (1) making resources tangible (2) administration of human resources (3) auxiliary services (4) focusing on quality 3. 4. Making resources tangible As mentioned earlier in this paper, a large difference between goods en service marketing is the intangibility of services. The marketing of goods is traditionally built around a tangible core. Around this core all marketing activities, like pricing, distribution and communication are wrapped. In order to compete on the perceived service quality, there should be something comparable to this tangible core in goods marketing which is observable and measurable to the customer.
Gronroos (1978) suggests doing this by making the resources of the service offerings tangible. In this context resources can be for example an accessible location, an attracting interior and the means of transportation. These resources make it possible to generate an identity as a service firm, which customers can evaluate. 3. 4. 2 Administration of human resources Another advice when marketing a service firm is the administration of human resources. In a company every employee is a salesman and these vendors are very important when the customer evaluates the perceived service offering.
When a customer is not appropriately treated in the first contact with the service provider or the personnel’s competence is not adequate, the customer will not feel comfortable in the further service offerings. Therefore, marketing and communication training is highly recommended. 3. 4. 3 Auxiliary services A third way of standing out from other service providers can be achieved by offering auxiliary services. Gronroos (1978) stated these auxiliary services are all extra features and services a company offers.
These extra services are not the bearer of the service itself, but can promote the service to the market and are perceived by the customer as a part of the service offerings and can therefore be applied as a means of competition. An example of auxiliary services in design consultancies might be as simple as offering a cup of coffee and guided tour when a customer visits the company or a free business diner or Christmas present. Of course more innovative auxiliary services will be more convincing and distinctive, especially for creative service firms like design consultants. . 4. 4 Focus on quality, not price High quality is more important than low prices, the focus on competing on price should be eliminated. As mentioned earlier, reliability and the ability to respond to customers are considered as important criteria for service firms. Proving or showing the high reliability for example through quality labels, recommendations of former clients and a close clientele are important here. Also promotion (websites, magazines, public relations and publicity) can fulfil a meaningful role in communicating the high quality of the service.
Besides communicating the quality, there should also be an intern focus on high quality. A quality assurance program can help in achieving this. 3. 5 Advice on positioning and communication of design companies As mentioned in the analysis of the current situation, most design companies position themselves around the intangible word ‘innovative’. Together with the more conservative product-focus, design companies often fail to steadily position themselves in the market and distinguish from competitors. This paragraph will give advice on the positioning and communication of design companies. 3. 5. Positioning Lerner (2009) states one important change when positioning design companies is to not position the firm’s brand around the in-house capabilities. The capabilities support the brand, but are not the brand itself. As the capabilities can be easily copied and subtracted by competitors, this is not the way to position your company in the market. What is most important for successfully positioning a design company (and any other company), is a clear differentiation strategy. Focussing on one particular aspect, product or market is often frightening for design consultancies, because it looks like minimizing your market.
However, being an outstanding expert in a particular area makes you more reliable and recognizable for the market. To come to this point, one should become superb in the differentiated area. Knowing your target market, products and/or attribute is a must. Then awareness should be created amongst potential clients. After the clients are aware of the company’s existence it is important to print your company in their long-term memory. Design agencies are often specialists in advising clients in their product and (visual) positioning strategy.
As they are busy sorting this out for their clients, they have never thought about targeting themselves. Needless to say that having a differentiation and targeting strategy will strongly help in gaining competitive advantage. When targeting a market, define the scope of the company, including the geographical area (maintaining relations and having meetings in a too wide-spread area is often impossible). Also define the characteristics of the average client, e. g. age, gender, behaviour and attitude. Doing this will help you in the communication strategy. 3. 5. Communication Being very talented and skilled designers is not longer enough to have a successful design company. Public Relations, communication with potential customers, networking and promotion by word-to-mouth are key factors in achieving this. So what are general tips when promoting a design agency? Customers that buy a service, do this based on trust and reputation. Regularly the need of a customer is rather immediate, but the purchasing decision is still well thought of. They will not make hasty purchasing decisions as some customers do when buying product.
All tools that try to ‘rush’ consumers into these decisions, like flashing web advertising and fast ordering systems, are thus not very useful in service marketing. However, there are some other tips about creating awareness and advertising. As a design consultancy you are not a corporation. All attributes that are related to corporations are mostly not encouraging for showing that you are a creative and innovative design firm. Best of all, people somehow expect design companies to behave different, thus evading protocols is mostly forgiven by the customer.
So forget all standardized sizes for business cards, papers and presentation in which you will not be able to differentiate from competitors and use this opportunity to behave different. Websites can give customers a nice first impression of your company. However, one should realize every company has a website nowadays, so it is not differentiating anymore. Nicely designed websites will of course give a better impression, but customers know there is more than just a website. A much more valuable and differentiating way of promotion is getting into publicity.
Publicity is part of Public Relations and is an attempt to generate relevant news people are interested in and where a company benefits from (Dwyer and Tanner, 2009). When an authoritative third party recommends your company, the brand identity and customer’s trust will be further extended. Besides publicity, most other aspects in Public Relations are vital as well. Building long-term relationships and getting on the preferred suppliers lists are musts. 4. Conclusions and Discussion This paper addressed how the marketing of a service business like a design agency differ from regular product marketing.
The most important differences between products and services are that (1) services are intangible, (2) the production and consumption in services are inseparable and (3) there is a lack of ownership. Similarities on the other hand are also plentiful. The core of service marketing is just like in product marketing creating added value to the customer. Decisions should be made on pricing, promotion, distribution and new product/service development and a deep understanding of the target market and consumer is needed. However, the focus on the means to achieve this may be different in services.
Clients of service companies make their decisions based on trust, reliability and experience. Although the perceived service quality is much more valued by the customer than pricing, most service companies do still compete on price. It is advised to turn to competition on quality instead on price. As every employee in the company can be seen as a salesman, human resource administration and internal communication are of high importance to build trust to the clients and increase the service quality. In order to build sustainable competitive advantage it is advised to make the company’s resources tangible (as the service itself is intangible).
These resources can be the location, transportation or interior, but for design agencies also the service outcome ???designed products- can be made tangible in the way of a strong portfolio. Another way of gaining competitive advantage is to offer auxiliary services. Like in any other business, when marketing a design company it is important to differentiate yourself from competitors. In case of a design company this might be even more difficult as the designers often state they can design products in many different target markets.
However, focusing on one particular product group or target market is vital when you want to differentiate. This hidden fear for clearly differentiating is probably one of the reasons why many design companies fail to successfully market themselves. Only by differentiation you can really know your customers and establish a reliable and experienced company in that field, so that customers are willing to purchase the service at your company. Focusing on smaller parts of the total market will also help to transfer from pricefocus to an emphasis on high quality.
One step further from choosing a differentiation is letting go of the conservative attitude of waiting for design orders, and start thinking about developments in the market and the changing consumer needs. Being more market and consumer orientated will create a complete new attitude where the design companies come towards the client instead of the other way around. This paper provides a general overview on the topic. It helps design companies and students to think not only about marketing the product or client they are working for, but also their own company.
Essential in this is the awareness that marketing design means marketing a service. Although many general marketing tools and strategies are also valid for marketing services, it is important to understand the differences and the consequences for the marketing. In the paper several articles and books are used to perform a literature study. The scope of this paper is rather broad, which makes none of the topics is treated very detailed. It is recommended to perform more in-depth studies in the different topics (like purchasing decisions, communication, strategies etc).
Also case studies on design firms and quantitative research that compares the theory with practice can be recommended. Although general information on service marketing will give a clear view on the overall marketing for design firm, every company will be different. Strategies and tools might differ between companies that have different scopes and markets. References Gordon, L. G. , Calantone, R. J. and di Benedetto, C. A. (1993), “Business-to-business Service Marketing; how does it differ from business-to-business product marketing? “, Journal of Business & Industrial Marketing, Vol. 8 No. 1, pp. 45-57. Parasuraman, A. 1998), “Customer service in business-to-business markets: an agenda for research”, Journal of Business & Industrial Marketing, Vol. 13 No. 4/5, pp. 309-321. Gronroos, C (1978), “A Service-Orientated Approach to Marketing of Services”, Journal of Business & Industrial Marketing, Vol. 12 No. 8, pp. 588-601. Cooper, P. D. and Jackson, R. W. (1988). “Applying a Services Marketing Orientation to the Industrial Services Sector”, Journal of Services Marketing, Vol. 2 No. 4, pp. 67-70. Forbis, J. L. and Mehta, N. T. (1981), “Value-based Strategies for Industrial Prodcuts”, Business Horizons, Vol. 24 No. 1, pp. 32-42. Maar, N. E. Sherrard, M. J. , and Prendergast, G. P. (1996) “Marketing and Professional Service: The Case of Consultancy Engineering”, The Service Industries Journal, Vol. 16 No. 4, pp. 544-562 Preddy, S. (2004) “How to market Design Consultancy Services: finding, winning, keeping and developing clients”, 2nd ed, Gower Publishing Limited, Aldershot Lerner, A. (2009) “Marketing your Design Firm: How to brand yourselves as well as you brand your clients. “, [Online] Available: http://www. core77. com/reactor/05. 06_lerner. asp F. R. Dwyer, J. F. Tanner, Jr (2009) “Business Marketing; Connecting Strategy, Relationships, and Learning”, McGraw-Hill