Marketing communication decisions in a service industry

Originally the marketing mix approach – term created by Neil Borden in 1953 - included price, product, place and promotion. Later three more P’s was added to the list because of the emerging services marketing approach: Physical evidence, process and people (Magrath 1986). Marketing communications, an important part of the field of marketing, can be said to be in the part of “Promotion” P in the mix.

Marketing communications include advertising, personal selling, sales promotions and public relations.

Management of the marcom decisions

Pickton and Broderick (2001) have created “the Wheel of integrated marketing communications” in order to make a clear visual presentation of the field of marketing communications and the strategic tasks facing the decision making of the marketing communications tasks: customer contact management and image and brand management. A customer contact management is a function of a direct marketing and especially the personal selling function with features of sales, promotions and public relations. An image and brand management is on the other hand the communication with target audiences “from a distance”. The division of these two strategic perspectives can be thought to have same origin as the traditional marketing management division has: Strategic management and operative management.

Marketing communications management can be divided into two categories when looking it from the organizational perspective: strategic level management and operative level management. The strategic level responsibilities in marketing are focused to a senior management, especially to the strategic planning function, as the operational level responsibilities include the finance or quality control issues (Laing & McKee 2000). Typical features in strategic marketing management are long-term thinking and long-term effectiveness, broad scope of operations and target-orientedness. Strategic marketing focuses on creating a marketing strategy, mission, vision and competitive strategies and tactics. Strategic marketing decisions are long-term decisions like brand development, target markets, market position and value position. (Lahtinen et al. 1998; Kotler et al. 2012)

An operative marketing management is a daily basis management. The operative management focuses on successfully conducting marketing strategies and tactics.

Operative management forms budgets and ensure the achievement of the financial targets. Operative management also conducts the marketing communications. (Lahtinen et al. 1998) Operative marketing is in the hands of operative, mid-level management and the results can be seen in local operations.

The main areas for a service marketing communications where the decision making is focused, are “above-the-line” mass media advertising, public relations,

“below-the-line” sales promotions and personal selling, in other words, promotional mix. (Peattie & Peattie 1995; Pickton & Broderick 2001, 460) Usually the role of the decision maker is embedded to the manager who is responsible for creating a marketing communication strategy. Phelps & Harris (1996) studied the responsibilities and roles of decision maker, in this case the creator of marketing strategy, and found out that nearly 30 % of companies stated that they use consensus approach in marketing communications decision making and roughly about 70 percent made decisions concerning marketing communications strategy individually. They also found out that the use of consensus approach, where the heads of different communications functions work together to create communications strategy, is expanding.

Amount of the responsibilities among managers can be viewed from the internal or external point of view. The external point of view measures the amount of responsibilities that external partner, like advertising agency or PR firm, has. The internal point of view on the other hand describes the internal division of labor in the company: How the responsibilities are dispersed inside of the firm between the managers setting the objectives and creating the strategy, like brand manager and marketing communications manager. (Duncan & Everett 1993)

Service marketing

The service marketing started to develop as a discipline when a traditional marketing mix management approach fitted poorly for service firms’ customer relations. This was also when the opposite of transaction marketing, the relationship marketing approach started to develop. (Grönroos 1995) The goal of the relationship marketing is to gain customers and also to keep them, as in transaction marketing approach, the goal is just to get the customers. The focus is on creating stable and long-term relationships between the company and the customers (and other stakeholders as well). Relationship marketing strategy is well applicable in service companies, whereas a transaction marketing strategy is often applied in consumer goods companies. (Grönroos 1994)

A service has as many definitions as there are writers. Grönroos (1995) defined service as a process or performance, where the customer is involved in a value creation process. This process can be long-term or short-term, or regular or one-time encounter. Services can also be said to be intangible economic activities offered by one party to another. (Lovelock & Wirtz 2011) Sampson and Froehle (2006) have studied the problematic nature of the term “service”. The lack of common definition of service has caused problems for service management researchers during the years. As Sampson and Froehle (2006) state, there is no unified structure that defines what service is and what it is not. Multiple different definitions on the services can be found, but there lies a fundamental issue in these definitions: They describe lots of different industries with multiple characteristics and even though there can be found commonly recognized “service industries”, there are exceptions that don’t fit to these definitions. As technological innovations keep developing, the more there is going to be modern companies that produce tangible services – as for example the software companies.

Sampson and Froehle (2006) have created the Unified Services Theory (UST) to demonstrate how service processes differ from non-service processes. The model defines service as a service process, where a customer provides significant inputs into the production process. Services that can be prepared to product but cannot be executed without physical presence of the customers are named as customer-self inputs. This can be applied into case company’s industry also: Service organization’s products cannot be sold without the customer actually being present, because of the identity protection laws regulations and the nature of financial products.