Journal of Services Marketing

Emerald Article: An investigation of marketing problems across service

typologies
Michael Clemes, Diane Mollenkopf, Darryl Burn

Article information:
To cite this document: Michael Clemes, Diane Mollenkopf, Darryl Burn, (2000),"An investigation of marketing problems across
service typologies", Journal of Services Marketing, Vol. 14 Iss: 7 pp. 573 - 594
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An executive summary for

managers and executive
readers can be found at the
end of this article

An investigation of marketing
problems across service
typologies
Michael Clemes

Senior Lecturer, Commerce Division, Lincoln University, Canterbury,

New Zealand

Diane Mollenkopf

Senior Lecturer, Commerce Division, Lincoln University, Canterbury,

New Zealand

Darryl Burn

Senior Product Manager-Services Development, Telecom, Wellington,

New Zealand
Keywords Services marketing, Marketing management, Marketing strategy,
Classification
Abstract Focuses on the commonly cited marketing problems that arise from the special
characteristics of services. Empirically tests for the differing impact of these problems
among service organizations, by assessing marketing managers' perceptions about the
problems that their organizations face. Results suggest that managers from three main
service typologies (based on Silvestro et al's 1992 classification scheme) do perceive
differences in the degree of impact the problems have on their organizations. The findings
and their strategic implications for marketing managers are discussed, along with
limitations and future areas of research.

Characteristics of services

Introduction
Services marketing academics have successfully argued that a number of
implications arise from the distinguishing characteristics of services,
principally, that the characteristics cause a number of marketing problems
for service marketers that are not encountered by marketers of tangible goods
(Bateson, 1977, 1995; Eiglier and Langeard, 1977; Zeithaml et al., 1985). If
these problems are not carefully managed they usually have a negative
impact on perceived service quality, which reduces customer retention and
organizational profits (Clemes and van Ameyde, 1997; Bateson, 1995). In
spite of the broad impact the problems have on service quality and
organizational profitability, however, much of the early published services
marketing literature focused on the special characteristics of services and
their resulting marketing problems in an effort to legitimise the field of
services marketing (Fisk et al., 1993). Consequently, comparisons were most
commonly drawn between goods and services with only limited attention
paid to any diversity present within the service sector itself. Recognising the
possibility of differences within the service sector, Lovelock (1983)
suggested that an effort was required to group services into relatively
homogeneous categories that would transcend narrow industry boundaries
and provide service marketers with useful managerial insights in order to
establish greater managerial sophistication in marketing services. In
recognition of this need, researchers have developed a variety of
classification schemes that attempt to group services on the basis of common
characteristics in an attempt to aid service marketers in developing
marketing strategies (Bowen, 1990). However, while these schemes have
developed various classifications based on services' characteristics, none
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JOURNAL OF SERVICES MARKETING, VOL. 14 NO. 7 2000, pp. 573-594, # MCB UNIVERSITY PRESS, 0887-6045

573

have assessed to what degree problems resulting from the special

characteristics may be experienced by different types of service
organizations. In order to use classification schemes as a tool to providing
better direction to services marketers, the schemes need to move beyond
descriptive categorisations of service organizations. There is a need for
information to help determine how service firms differ across the categories
of any given classification scheme. In this way, classification schemes
should prove to be useful conceptual tools for managers developing services
marketing strategies, just as the product life-cycle has been a useful
conceptual tool for managers since the early 1960s.
The objective

The objective of this research, therefore, is to determine to what extent

different service typologies experience commonly cited marketing problems
that arise from the special characteristics of services. This is achieved by
measuring marketing managers' perceptions about problems their service
organizations face, using the Silvestro et al. (1992) classification scheme to
distinguish between service types across industries. Thus, this study
contributes to the services marketing literature through its application of
Silvestro et al.'s (1992) theoretical classification framework and by
addressing Zeithaml et al.'s (1985) largely unanswered call for empirical
research into services marketing which transcends narrow industry
boundaries.
Background
The majority of classification schemes have used a two by two matrix
approach to classify services (see for example, Bell, 1981; Lovelock, 1983;
Stiff and Pollack, 1983). Two recent studies have developed service
classification schemes that use multiple characteristics as the basis for
classification (Bowen, 1990; Silvestro et al., 1992). Both the Bowen (1990)
and Silvestro et al. (1992) classification schemes provide superior
approaches to understanding differences between service organizations,
relative to the majority of other schemes, because they both use multiple
dimensions. The multiple dimension approach permits analysis of a greater
number of characteristics which may differ among service organizations
(Bowen, 1990).

Two approaches

Of the two approaches, Silvestro et al. (1992) proposed a more processfocused classification scheme, analogous to a manufacturing process model,
in order to bring together several previously suggested classification schemes
into a cohesive framework. This framework, based on data from in-depth
case studies, suggested that three types of service processes exist:
professional services, service shops, and mass services. Each service process
type is characterised using the following six dimensions: people versus
equipment, level of customization, extent of employee/customer contact,
level of employee discretion, value added in back office versus front office,
and product versus process focus. Using these six dimensions, Silvestro et al.
(1992) formulated the following three service process types:
(1) Professional services: organizations with relatively few transactions,
highly customized, process-oriented, with relatively long customer
contact times. Most value added is in the front office, where considerable
judgement is applied in meeting customer needs. Examples of
professional services include consultants, corporate banks, doctors and
architects.
(2) Service shops: a category which falls between professional and mass
services with levels of the classification dimensions falling between the

574

JOURNAL OF SERVICES MARKETING, VOL. 14 NO. 7 2000

other two extremes. These services display moderate degrees of

customization and discretion, a mixture of people and equipment, and
value is added in both the front and back office. Examples of service
shops include retail banks, rental services and hotels.
(3) Mass services: organizations where there are many customer transactions, involving limited contact time and little customization. The
offering is predominantly product-oriented with most of the value being
added in the back office and little judgement applied by the front office
staff. Examples of mass services include telecommunication, bus
services, and fast foods.
Figure 1 illustrates how the three service categories are positioned relative to
each other, suggesting that as the number of customers processed
(production volume) by a typical unit per day increases, the following trends
are likely to occur:

Service typologies

The focus moves from a people to an equipment orientation.

The length of contact time moves from high to low.

The degree of customization moves from high to low.

The level of employee discretion moves from high to low.

The value added moves from the front office to the back office.

The focus moves from a process to a product orientation.

Silvestro et al.'s (1992) process-focused, multi-dimensional classification

scheme is incorporated into this study because of its usefulness in providing
a method for comparing service typologies. However, the scheme is not
without its limitations. As with other classification schemes, not all services
fit exactly in to the various classes (Baron and Harris, 1995). There are also
practical problems in measuring exactly which classification a given service
organization may fit into, or assessing how cultural differences may affect
the classification of some service types. However, just as the Product Life

Figure 1. Classification of service processes

JOURNAL OF SERVICES MARKETING, VOL. 14 NO. 7 2000

575

Cycle is a useful conceptual tool for managers in developing their marketing

strategy, a classification approach can be used to guide managers in
developing their service strategy. The Silvestro et al. (1992) classification
scheme provides a useful method for comparing service typologies along the
intangible portion of a Shostack (1977) continuum, in much the same way
that Shostack (1977) uses the continuum to broadly compare services to
goods. Further, Silvestro et al.'s (1992) scheme envelopes Lovelock's (1983)
seminal work on services classification, which is largely process focused.
Marketing management
activities

Hypothesis development
Marketing management activities in the service sector have historically been
distinguished from those in the manufacturing sector on at least five generic
differences: intangibility, inseparability, heterogeneity, perishability, and
lack of ownership. These characteristics are used here to differentiate
services based on Silvestro et al.'s (1992) three service process types.
Intangibility
Intangibility is the dominant characteristic of services because it is often not
possible to feel, see, taste or smell a service, as services are an experience or
a performance and not a physical object. Although most services include
some type of tangible element, the service performance itself is basically an
intangible and is often mentally difficult to grasp.
The services literature identifies several problems stemming from
intangibility:
.

Communication: intangible services cannot be readily displayed or easily

communicated to customers (Hill and Gandhi, 1992).
Diffusion: services as performances or experiences are often mentally
difficult to grasp and are therefore slow to diffuse (Zeithaml, 1981).
Protection: intangibly dominant services are difficult to patent (Cowell,
1985).
Cost calculation: people-based services, which rely on customer
involvement, make costs difficult to calculate (Dearden, 1978).
Price setting: prices are difficult to set for people-based, heterogeneous
services (Lovelock, 1981).

Within the Silvestro et al. (1992) classification scheme, professional services

are described as relying heavily on people and mental processes, and are
therefore thought to be more intangible than service shops, which tend to be
more equipment-based and less people-based. Service shops, in turn, are
thought to be more intangible than mass services, which are highly equipmentand product-focused. Therefore, the following hypotheses are presented:
Professional service
organizations

Professional service organizations are expected to experience the problems

of: H1 ``Communication''; H2 ``Diffusion''; H3 ``Protection''; H4 ``Cost
calculation''; H5 ``Price setting'' to a greater extent than service shop
organizations, which in turn will experience the same problems to a greater
extent than mass service organizations.
Inseparability
The second characteristic, inseparability, means that services are produced
and consumed at the same time. It is often difficult to separate the provider
of the service from the service itself. Four problems stemming from the
characteristic of inseparability are presented with related hypotheses.

576

JOURNAL OF SERVICES MARKETING, VOL. 14 NO. 7 2000

Customer involvement in production. As the customer is involved in the

production process he/she can influence the quality of the outcome (Hill and
Gandhi, 1992). Because professional services are defined by Silvestro et al.
(1992) as being the most highly customised as compared to service shops or
mass services, which are defined as being the least customised:
H6: Professional services are expected to experience the problem of
``Customer involvement in production'' to a greater extent than service
shop organizations, which in turn will experience the same problem to a
greater extent than mass service organizations.
Impact on service
experience

Inter-client interaction
Other customers can impact on the service experience in a negative or positive
way (Gronroos, 1978; Grove and Fisk, 1997). Contact time and customisation
are described as low for mass services, relative to service shops and
professional services. Moreover, service encounters for mass services more
often involve the presence of multiple customers at the same time. Therefore:
H7: Mass services are expected to experience the problem of ``Inter-client
interaction'' to a greater extent than service shop organizations, which in
turn will experience the same problem to a greater extent than
professional service organizations.
Provider representation
As the provider is heavily involved in the production process, the service
provider is often seen as the service itself (Bateson, 1995). The nature of
professional services, with high contact time, high levels of customisation
and high levels of discretion relative to service shops and mass services,
respectively, leads to:
H8: Professional services are expected to experience the problem of
``provider representation'' to a greater extent than service shop
organizations, which in turn will experience the same problem to a
greater extent than mass service organizations.
Mass production centralisation
It is difficult to mass-produce services because the service provider cannot
be separated from the service itself. Because professional services are highly
customized, service shops are moderately customized and mass services are
the least customized:
H9: Professional services are expected to experience the problem of
``Centralized mass production'' to a greater extent than service shop
organizations, which in turn will experience the same problem to a
greater extent than mass service organizations.

Standardised output

Heterogeneity
The third characteristic of services and refers to the difficulty in achieving a
standardised output in people-based performances. Two marketing problems
have been cited as stemming from this characteristic.
Quality control
It is difficult to control quality in performances that rely on fallible people as
one of the main inputs (Bitner and Zeithaml, 1987). Because of the high
reliance on people, high levels of customisation and discretion in
professional services relative to service shops and mass services,
respectively:

JOURNAL OF SERVICES MARKETING, VOL. 14 NO. 7 2000

577

H10: Professional services are expected to experience the problem of

``quality control'' to a greater extent than service shop organizations,
which in turn will experience the same problem to a greater extent than
mass service organizations.
Promotion
It is difficult to promote services as output is often variable (Abernathy and
Butler, 1992). Because professional services have a high reliance on people
and a strong focus on customization (both of which lead to variable outputs),
relative to service shops and mass services, respectively:
H11: Professional services are expected to experience the problem of
``promotion'' to a greater extent than service shop organizations,
which in turn will experience the same problem to a greater extent than
mass service organizations.
Perishability

Perishability
The fourth defining characteristic of services is perishability. Services are
performances and if they are not sold today, they cannot be saved or stored for
a sale tomorrow. Parasuraman et al. (1988) provide evidence that the inability
to store inventory and the difficulty of demand/supply synchronisation are
considerable problems for service marketers. Capacity lost in many services
cannot be regained (Bateson, 1977) and difficulty in equalizing supply and
demand makes it difficult to adequately staff services (Parasuraman et al.,
1988). The Silvestro et al. (1992) classification scheme provides no clear basis
for distinguishing between service organizations relative to perishability.
Therefore, there is no reason in this particular study to expect differences
between professional services, service shops, or mass services.
Professional services, service shops and mass services are expected to show
no differences in the extent to which they experience the problems of:
H12: ``Inventory''.
H13: ``Demand/supply synchronisation''.
Lack of ownership
The last characteristic used in this study is lack of ownership. Usually,
service customers only have access to, or use of, a facility where a service is
performed. Payment for the service is for access only, and no tangible
ownership results from the exchange. Bateson (1995) has identified the lack
of customer control as a possible inhibitor in the purchase of intangibly
dominant services. Therefore:
H14: Professional services are expected to experience the problem of
``customer control'' to a greater extent than service shops, which in
turn will experience the problem to a greater extent than mass service
organizations.

Primary data

578

Research design and methodology

Primary data were collected using a cross-sectional mail survey of service
organizations operating in New Zealand. A wide range of service
organizations was required in order to ensure an adequate sample size for
each of the three service types. Sampling from a range of service industries
also allows greater generalisation of results to service sectors in other
countries. In order to obtain a sample from a range of service organizations
across a variety of industries, a sample was drawn from the population of
service organizations operating in New Zealand. First, a list of service
JOURNAL OF SERVICES MARKETING, VOL. 14 NO. 7 2000

industries was compiled using Standard Industry Classification (SIC) codes.

These codes were then grouped according to Silvestro et al.'s (1992)
definitions of Professional Service, Service Shops and Mass Service
organizations. Table I illustrates the types of services represented in each
service category. A local mailing list company then randomly selected
service organizations from each SIC code within its database to create a
sample of organizations in each of Silvestro et al.'s (1992) groups. Prior to
mailing any surveys, the randomly generated sample was further scrutinised
by the researchers to ensure that each firm clearly fell within the
classification bounds[1], and to ensure that each firm being sampled had a
clearly defined marketing manager, to whom the survey could be addressed.
Multiple Comparison Tests were used in this study to analyse the data. The
sample size was selected to achieve a 0.8 level of statistical power at the
5 per cent level of confidence, with approximately equal sample sizes across
the three service types. Therefore, at least 36 respondents in each of the three
service categories were required (Howell, 1987).
Marketing problems

Previous studies provided little assistance in the operationalization of the

marketing problems because they either used a single item to capture each
problem or did not report their operationalization procedure (see for
example, Zeithaml et al. 1985; Bateson, 1977; Eiglier and Langeard, 1977).
Consequently, new measures were developed for each of the constructs.
Each construct was operationalized using multiple seven-point scales
consisting of statements to which respondents were asked to indicate the
extent to which they agreed or disagreed with each statement. Each sevenpoint scale was anchored by ``strongly agree'' and ``strongly disagree'' with
intermediate points left unlabelled. Table II provides a summary of how each
of the constructs was operationalized, including the total number of items
used to measure each construct and a description of what the items sought to
measure. The individual scale items used to measure each construct are listed
by construct in the Appendix.
Because the survey instrument was developed specifically for this study, a
pre-test was conducted to assess the reliability of the scale items, and to
refine the instrument as a whole. A pre-test of 60 service organizations (20
professional services, 20 service shops, and 20 mass services) was
conducted, and indicated that several of the scales had a reliability less than
0.70. These scales were subject to minor modifications that included
rewording items or deleting items that clearly detracted from the overall
Professional services

Service shops

Mass services

1.
2.
3.
4.
5.
6.

1. Business services
(e.g. desktop publishing,
photocopying, etc.)
2. Direct mailing agencies
3. Finance and banking
(retail)
4. Hotels
5. Insurance services
6. Personal services
(e.g. health and fitness,
hairdressing, etc.)
7. Rental services
8. Repair and maintenance

1.
2.
3.
4.
5.
6.
7.
8.
9.
10.

Advertising agencies
Consultants
Graphic designers
Investment services
Medical services
Professional groups
(i.e. groups of lawyers,
accountants, doctors, etc.)
7. Real estate agents
8. Transport agents

Airlines
Airport authorities
Amusement/recreation
Communication
Electrical supply
Libraries/museums
Port companies
Radio/television
Theatre/movies
Transport

Table I. Services selected for sampling

JOURNAL OF SERVICES MARKETING, VOL. 14 NO. 7 2000

579

Construct

No. of
items Description

Intangibility
Communication

Diffusion

Protection

Cost calculation

Price setting

Inseparability
Customer
involvement in
production

Inter-client
interaction

Provider
representation

Centralised mass
production
Heterogeneity
Quality control

Promotion

Perishability
Inventory

Demand/supply
synchronisation
Lack of ownership
Customer control

Two dimensions, ``experience qualities'' and ``sensory

deprivation'' were used to operationalize this construct. Items on
the first dimension related to the need for customers to experience
the service before fully understanding it, and items related to the
second dimension deal with the lack of physical form associated
with services
The items addressed the speed at which new innovative services
were accepted by customers
The items related to the ease with which a service organization
was able to stop its competitors from copying the services it
provided
Two dimensions were used to operationalize this construct. The
first dimension, ``fixed cost proportionment'' referred to the
ability of the organization to proportion fixed costs across
customers. The second dimension ``standard unit definition''
related to the ease with which the service can split its service into
standard units
Two dimensions, ``price-cost linkage'' and ``inconsistent service
performance'' were used to operationalize this construct. Items on
the first dimension referred to the clarity of the link between price
and the cost of inputs for customers. Items on the second
dimension related to the ability of the organization to fix prices
prior to performing the service
Three dimensions were used to operationalize this construct. The
first dimension, ``quality dependence'' related to the extent that
overall service quality was affected by the quality of customer
input. The second dimension, ``productivity dependence'' related
to the extent that productivity was affected by customer input.
The final dimension, ``process visibility'' related to degree that
customers could view the service production process
Two dimensions were used to operationalize this construct. The
first dimension, ``inter-client conflict'' referred to the extent that a
disruptive customer would affect the experience of other
customers. The second dimension, ``queue formation'' referred to
the likelihood that customers would have to wait in a queue
before being served
Respondents indicated the extent that they believed customers
associated the quality of the service provider with the quality of
the whole organization
Items related to the ability of the organization to standardise its
service
Two dimensions were used to operationalize this construct. The
first dimension, ``quality standard precision'' addressed the ease
with which quality standards could be precisely set. The second
dimension, ``controllability'' addressed the ability of the
organization to ensure quality meet the set standards
The items addressed the extent that the organization was able to
include specific information cues in its promotions
The items relate to the ability of the organization to store unused
services
The items addressed the difficulty that the organization had
matching supply and demand
Items addressed the status of the provider of the service relative
to that of the customer

Table II. Construct operationalization

580

JOURNAL OF SERVICES MARKETING, VOL. 14 NO. 7 2000

scale. Because of time constraints, no further pretesting was conducted.

However, reliability of the survey instrument was verified on receipt of the
completed responses prior to subsequent analysis.
Mail survey

A self-reporting mail survey was used to collect the data for this study. A
personalised cover letter and a copy of the survey instrument were sent to
marketing managers of service organizations selected for sampling. Two
weeks after the initial mailing, reminder letters and replacement questionnaires
were sent to those marketing managers who had not yet responded. The
reminder letter reiterated the importance of their responses and urged them to
complete and return their questionnaire if they had not already done so.
Results
In total, questionnaires were sent to 356 marketing managers across the three
services types; 145 useable responses were obtained, representing a 40.7 per
cent response rate. The sample size for each service type was above the
minimum sample size of 36 respondents per group, ensuring an adequate level
of statistical power. Table III presents a breakdown of the total responses.

No significant differences
between early and late
responses

Prior to analysis, the data were examined for nonresponse bias. A comparison of
the mean responses by early and late respondents revealed that no significant
differences existed between early and late respondents. Early respondents were
those respondents that replied to the first mailing. Late respondents were those
respondents who did not reply until after the second mailing.
Also prior to analysis, the measurement scales were examined for reliability
and validity. As discussed previously, a preliminary test of the reliability of
the measurement scales for each dimension was conducted in the pre-test.
Verification of the scale reliability based on the actual survey data showed
that ten of the 14 dimensions were above the recommended alpha level of
0.70 (Nunnally, 1978). While four of the dimensions were below 0.7, these
four dimensions were still included in the analysis as their alpha scores were
only slightly below the recommended alpha level of 0.7, with the lowest
alpha level being 0.65. The Cronbach alpha scores for each of the
measurement scales are reported in the Appendix.
In addition to the verification of scale reliability, both the convergent and
discriminant validity of the measures was assessed using Principal
Components Factor Analysis. Convergent validity was indicated by items
designed to measure the same dimension loading on the same factor.
Discriminant validity was indicated by items only loading on a single factor.
All of the dimensions displayed both convergent and discriminant validity.

Analytical techniques

The assumptions associated with the analytical techniques of multiple

comparisons and discriminant analysis regarding normal distribution of
variables and homogeneity of variance were tested. Additionally, the data
were tested for multicollinearity and the presence of outliers (Hair et al.,
1995). Stem and leaf plots and normal probability plots indicated that most
Service type
Professional services
Services shops
Mass services
Total

Total number
surveyed

Number of useable
responses

Response rate
(%)

108
128
120
356

46
48
51
145

42.6
37.5
42.5
40.7

Table III. Response rate

JOURNAL OF SERVICES MARKETING, VOL. 14 NO. 7 2000

581

variables were normally distributed. Those variables with non-normal

distributions were examined more closely using box plots which identified
any outlying values which were subsequently removed from the analysis.
The Cochran C and Bartlett-Box F statistics were used to test for
homogeneity of variance, and indicated that variances were homogeneous.
Finally, the intercorrelation matrix for the 14 variables reflecting each
marketing problem was examined for evidence of multicollinearity. None of
the correlations exceeded 0.8, thus it was concluded that multicollinearity
was not a concern. See Burn (1997) for details on these statistical tests.
Multiple comparison tests

Results of hypotheses tests

Table IV reports the results of multiple comparison tests conducted on those
marketing problems which indicated significant differences existed in the
mean scores across the three service types. From these results, it is possible
to gauge the support for the 14 hypotheses. As discussed earlier, all but three
of the hypotheses predicted that the respective marketing problems would be
experienced by professional services to a greater extent than service shops
Marketing problems
Intangibility
H1: Services cannot be
readily displayed/
communicated
H2: New services are
slow to diffuse
H3: Services cannot be
protected by patents
H4: Costs are difficult to
calculate
H5: Prices are difficult to
set
Inseparability
H6: Consumers are
involved in
production
H7: Other consumers
affect production
H8: Provider is seen as
the service
H9: Centralised mass
productivity is
difficult
Heterogeneity
H10: Quality is difficult
to control
H11: Services are
difficult to promote
Perishability
H12: Services cannot be
inventoried
H13: Difficult to
synchronise supply
and demand
Lack of ownership
H14: Consumers feel a
lack of control
Sample size

Professional Service Mass Overall

Hypothesis
services
shops services mean (p-value) evaluation
4.59b

4.08c

3.35d

3.99
(1.10)

0.000

Supported

3.53b

3.46b

3.19b

0.224

5.66b

5.38b

5.66b

4.71b

4.09c

2.79d

Not
supported
Not
supported

4.18b

3.26c

2.35d

3.39
(1.03)
5.57
(1.25)
3.83
(1.44)
3.23
(1.28)

4.39b

4.89c

4.39b

4.56
(0.84)

0.000

Partially
supported

5.15b

5.23b

5.20b

0.942

6.06b

6.13b

6.03b

5.46b

5.24b

4.63c

5.20
(1.13)
6.07
(0.81)
5.10
(0.94)

Not
supported
Not
supported
Partially
supported

3.41b

2.80c

2.37c

0.000

4.43b

3.72c

3.35c

2.85
(1.08)
3.82
(1.29)

6.24b

6.20b

6.39b

6.28
(1.04)

0.620

4.58b

4.55b

4.27b

4.46
(1.16)

0.335

5.69b

5.31b

6.28c

5.77
(0.94)
145

0.000

46

48

51

0.453
0.000
0.000

0.844
0.000

0.001

Supported
Supported

Partially
supported
Partially
supported
Supported
Supported
Not
supported

b,c,d

Means with the same superscripts are

Notes: *Significant at the 1 per cent level.
not significantly different. Means with different superscripts are significantly different

Table IV. Perceptions of marketing problems among service types

582

JOURNAL OF SERVICES MARKETING, VOL. 14 NO. 7 2000

which would in turn experience the respective problems to a greater extent

than mass services. The exceptions to this rule include H7, which
hypothesized that the marketing problem ``inter-client interaction'' would be
experienced by mass services to a greater extent than services shop which
would in turn experience this problem to a greater extent than professional
services. Additionally, both H12 and H13 hypothesized that no significant
differences would exist across the service types for the marketing problems
``inventory'', and ``demand/supply synchronisation''.
Five hypotheses (H1-H5) were tested relating to the marketing problems
stemming from the intangibility of services. Support was found for H1, H4,
and H5, indicating that the marketing problems ``communication'', ``cost
calculation'' and ``price setting'' are all experienced by professional services
to a greater extent than service shops, which in turn experience these
marketing problems to a greater extent than mass services. While the
magnitude of mean scores for the marketing problem ``diffusion'' followed
the hypothesized pattern, the differences between the mean scores was not
found to be statistically significant. Similarly, no differences were found
between the mean scores for the marketing problem ``protection'';
consequently H2 and H3 were not supported.
Marketing problems

Four hypotheses (H6-H9) were tested relating to the marketing problems

stemming from inseparability. If the hypotheses for H6, H8 and H9 were to
be fully supported, the mean scores for professional services should have
been significantly greater than the mean scores for services shops; the mean
scores for service shops needed to be significantly greater than the mean
scores for mass services. H7 required the reverse to be true. Despite
significant differences existing between the mean scores across the three
service types for the marketing problems ``customer involvement in
production'' and ``centralised mass production'', only partial support was
found for H6 and H9. The results of Scheffe's multiple comparison test
(reported in Table IV) indicate that in both cases the mean scores for
professional services were not significantly greater than the mean scores for
service shops, although the mean scores for service shops were significantly
greater than the mean scores for mass services. No support was found for H7
relating to the marketing problem ``inter-client interaction'', or H8 relating to
the marketing problem ``provider representation'', because in both cases no
significant differences were found to exist between the mean scores across
the three service types.
Two hypotheses (H10-H11) were tested relating to the marketing problems
stemming from heterogeneity. For both problems, ``quality control'' and
``promotion'', the hypothesized pattern of professional services experiencing
the respective problems to a greater extent than services shops, which in turn
experience the problems to a greater extent than mass services, was found. In
both cases, however, the differences between the mean scores for mass
services and service shops was not considered statistically significant when
using Scheffe's multiple comparison test[2]. Consequently, only partial
support was found for H10 and H11.

Two hypotheses

The two hypotheses (H12-H13) relating to the marketing problems

``inventory'' and ``demand/supply synchronisation'' hypothesized that no
differences would exist between the three service types. The results indicated
that there is no difference between the mean scores of the three services
types; therefore, the null hypothesis cannot be rejected even at the
10 per cent level of significance. This supports the conceptual intent of the
hypotheses.

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583

H14 hypothesized that professional services would experience the marketing

problem ``customer control'' to a greater extent than service shops, which
would in turn experience this marketing problem to a greater extent than
mass services. However, no support was found for H14. In fact, mass
services, which were hypothesized to experience this problem the least, had a
mean score which was significantly greater than both the mean scores for
professional services and service shops.
The findings

Discussion of findings
The findings of this study suggest that different types of service organizations
do experience the marketing problems arising from the special characteristics
of services to different extents. While the majority of marketing problems
identified are experienced by New Zealand service organizations to varying
degrees, several problems are of particular concern for all three service types.
The service organizations sampled, regardless of their service type, all
experienced the following marketing problems to the same extent:
.

difficulty in diffusion;

protecting their services from being copied;

stopping customers negatively affecting the service experience of others

around them;

having the service provider being seen as the whole service;

synchronising supply and demand;

inventorying their services.

These marketing problems transcend the classificatory boundaries used in

this study, and with the exception of the diffusion issue, they are also the
marketing problems experienced to the greatest extent by all three service
types. In contrast, a number of marketing problems primarily stemming from
intangibility, heterogeneity and lack of ownership, do affect different service
types to different degrees. These relationships are discussed below.
Five marketing problems

Professional services
Five marketing problems stemming from intangibility and heterogeneity are
experienced by professional services to a greater extent than other service
types. Professional services experience greater difficulty displaying/
communicating their services, calculating costs accurately, setting prices,
promoting their services, and controlling service quality. These findings are
consistent with the characteristics that define professional services, namely,
professional services are more people-oriented and process-focused than
either services shops or mass services, and they have greater levels of
customization and employee discretion (Silvestro et al., 1992).
Service shops
As hypothesized, service shops experience most marketing problems to a
lesser degree than professional services but to a greater degree than mass
services. However, one marketing problem in particular distinguishes service
shops from the other service types. The problem of consumers being
involved in the production process of services causes greater difficulties for
service shops than it does for professional services and mass services. This
may be attributed to the numbers of customers being involved in a
``routine''-type service process at any one time. Service shops have moderate
levels of customization, customer contact time and employee discretion.

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Customers of service shops may demand a higher level of customization than

the organization is prepared to offer and/or employees are capable of
providing. In addition, mangers of service shops may insist on a lower level
of employee discretion than the level that is desired by their customers.
Mass services
Mass services are distinct from professional services and service shops as
they experience less difficulty with the marketing problems stemming from
intangibility and heterogeneity. Indeed, the findings indicate that mass
services have the least problems displaying/communicating their services,
calculating costs, setting prices, promoting their service, and controlling
service quality. The findings further suggest that mass services have less
difficulty mass producing their services in centralised locations. These
results are consistent with the characteristics of mass services as described by
Silvestro et al. (1992), namely, they are equipment focused, have low levels
of customization and employee discretion, and customers have less
involvement in service production due to shorter contact times.
Mass services

While mass services are generally distinct from the other service types, as
they tend not to encounter many of the marketing problems stemming from
intangibility and heterogeneity, one exception exists. Mass services
experience the marketing problem ``customer control'' to a greater extent
than both professional services and service shops. The reason for this finding
is not clear. However, a possible explanation may lie in the fact that because
consumers are not heavily involved in the production of a mass service, and
these services tend to be more standardised than customized, customers
would feel a lack of control over the service process.
Another explanation may be more closely related to the notion of inter-client
interaction. Although no support was found for the hypothesis that interclient interaction would be most strongly felt by mass service providers, the
surprise finding of customer control being a problem may be related to the
presence of other customers during the service encounter. Martin and Pranter
(1989) discuss characteristics of service encounters in which other customers
may be present during the service encounter. Close physical proximity,
verbal interaction between customers, waiting for the service and customers
sharing time, space or service utensils, all present situations where customers
will be interacting with each other. The presence of other customers in these
situations may cause a sense of crowding or loss of control over the situation
(Hui and Bateson, 1991).

Service marketing
literature

Theoretical implications
Zeithaml et al. (1985) argue that the service marketing literature tends to be
characterised by empirical research within service industries and by
conceptual work across service industries. The fact that valuable insights
were gained from this study which considered a wide range of service
industries suggests that empirical research into services marketing which
transcends specific service industries should be undertaken more frequently.
Further, the insights gained into the marketing problems experienced by service
organizations in this study were greatly advanced by the use of Silvestro et al.'s
(1992) classification scheme. The use of this scheme as a conceptual tool
allowed the identification of important differences within the New Zealand
service sector and helped to identify more clearly to what extent several
marketing problems were experienced. These important differences may not
have been identified if this study had examined services as a single

JOURNAL OF SERVICES MARKETING, VOL. 14 NO. 7 2000

585

homogenous group or within a specific service industry. Consequently, future

services marketing research should continue to develop and use service
classification schemes as a basis for comparing services issues.
A third implication for services marketing theory is the need for greater
consideration of the service characteristic ``lack of ownership''. Several
authors include this characteristic when discussing the unique features of
services (Cowell, 1985; Gabbot and Hogg, 1994; Gronroos, 1978). However,
much of the services marketing literature does not consider lack of
ownership a special characteristic of services, despite the fact that lack of
ownership is included in almost every definition of services (Bateson, 1995;
Palmer and Cole, 1995; Zeithaml et al., 1985). The findings of this study
indicate that, for marketing managers, lack of ownership is an important
characteristic of services, which they perceive as contributing to one of the
most important marketing problems experienced by all service organizations.
This was particularly evident for mass services. Therefore, the issue of
ownership needs to be reconsidered in future services research.
Special characteristics of
services

Managerial implications
The marketing problems that arise from the special characteristics of services
need to be managed, as a failure to do so leads to deteriorating levels of
perceived service quality, and ultimately a loss of profitability for service
organizations. Given the focus service organizations place on creating and
maintaining customer relationships, a decline in perceived service quality
stands to inhibit the formation and duration of such relationships. The
findings of this study have a number of implications for service practitioners
involved in forming relationships with their customers, primarily in the area
of strategy choice and implementation. In particular, the fact that certain
marketing problems are experienced to different extents across the three
service types has a number of implications for the specific strategies
implemented by each service type.
Service organizations conforming to the professional services classification
should be especially concerned with strategies to manage problems that arise
from high levels of intangibility and heterogeneity. Stressing word-of-mouth
communication, providing tangible cues, using uniquely attributable costs, and
perceived value pricing, are examples of the strategies suggested to manage the
marketing problems stemming from intangibility and heterogeneity (Abernethy
and Butler, 1992; Bitner and Zeithaml, 1987; Dearden, 1978).

Areas for service

organizaitons to address

Service organizations conforming to the service shops classification should

be particularly concerned with the customer interaction that occurs during
the service production process. The design and layout of physical facilities,
staff selection and training, and customer education are examples of areas
that must be addressed if service shops are to overcome the problems created
by customers being involved in the production process (Bateson, 1995;
Bitner, 1992; Zeithaml et al., 1985).
Service organizations conforming to the mass services classification should be
primarily concerned with reducing their customers' feelings of lack of control.
Increasing the level of customization is one way of increasing customers' actual
control over the production process of services (Shamir, 1980). However, the
service marketer must be aware that increasing customization may lead to other
problems such as heterogeneous service quality, and difficulties in calculating
costs and subsequently setting prices (Bateson, 1995; Shamir, 1980).
Consequently, the benefits and costs of any strategy implementation to increase
customers' feelings of control must be determined.

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Another way to enhance customers' sense of control lies in the realm of

maximizing customer compatibility by grouping like customers together,
establishing customer codes of conduct, or creating a physical environment
that enhances customer compatibility (Martin and Pranter, 1989).
Additionally, managers should attempt to provide as much choice to the
customer as possible to maintain a sense of control over the situation (Hui
and Bateson, 1991). This might include express lanes, call-backs, or other
means of achieving the service outcome.
Greater cross-fertilisation
of ideas and strategies

The findings of this study also have implications for service marketers
regarding the sourcing of ideas and strategies to overcome the marketing
problems that they experience. That is, service marketers should look to
other similarly classified service organizations for solutions to homogeneous
marketing problems, and to all service organizations for solutions to those
marketing problems that all service types experience.
Finally, this study indicates to individual service organizations that many of
the marketing problems they experience are also experienced by other
service organizations in other industries. Consequently, this study may
encourage greater cross-fertilisation of ideas and strategies to better manage
the marketing problems experienced by all service organizations.
Limitations and future research
This research has several limitations. First, the impact of technology on all
industries along the services continuum has been ignored. In this sense the
generalisations that can be made about the research findings are limited
because of the static, rather than futuristic, nature of the study. The current
research relied on service managers' input at a given point in time to develop
an understanding of perceived differences between different service types.
However, the increasingly important role of technology in the services sector
suggests that how services will be delivered in the future may be
dramatically different than how they are delivered today. Future research
should therefore consider the role of technology and how it may change the
relative position of a service organization within the classification scheme,
and subsequently, the attitudes of marketing managers towards problems
stemming from the special characteristics.

Importance of input from

customers

Another limitation of this research is that it considered the marketing

problems from the perspective of service providers, but did not include input
from customers. To the extent that managers' perceptions have been
influenced from customer feedback, there is an element of input from
customers. However, customer input should be explicitly sought and
included in future research in order to understand customers' attitudes
towards the commonly identified problems that arise from the special
characteristics of services. For example, customer input may shed more light
on the issues relating to inter-client interaction and customer control. This
information could help services marketers to better manage the problems that
have the greatest impact on their customers.
No attempt has been made in this study to improve Silvestro et al.'s (1992)
classification scheme. The objective of this research was not to test the
scheme, but to use it as a conceptual tool to further our understanding of
marketing problems related to services. Future research could be directed at
testing and improving the scheme itself, especially in light of changes
brought about through technology implementation within the services sector.

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587

Difficulty of classifying
firms into three categories

In recognising the scheme as a conceptual tool, the difficulty of classifying

firms into the three distinct categories of professional services, service
shops and mass services must be recognised. Although every attempt was
made to ``purify'' the sample prior to sending out the final mailing, not all
organizations fit neatly into one category or another based on an SIC code.
For example, a retail bank can provide full service counters inside the bank,
which supports the classification of a bank as a service shop; the same bank
can also provide ATM machine access or Internet access for many
customer transactions. These transactions would be clearly high on the
equipment characteristic, low on contact time and customization,
suggesting the bank should be placed in a mass service category. This
example highlights the often-blurred boundaries between Silvestro's
categories. An inability to successfully deal with these situations may have
weakened the results of this study, or prohibited the finding of expected
relationships.
The measures used in this study were developed by the researchers. While
every attempt was made to ensure the validity and reliability of the measures,
they can be improved. Not all measures were as reliable as hoped, and while
the resultant data from these measures were still included in the analysis,
weakness in the measures may be partially responsible for some hypotheses
not being supported. Future research should try to improve on these
measures, and use them in replication studies to develop more reliable and
valid measures over time.

Three areas for future

research

Finally, research should be initiated in the area of service organization

strategy. Future research should investigate at least the following areas:
(1) the development of a framework of commonly cited services marketing
strategies suggested to overcome the marketing problems stemming from
the special characteristics of services;
(2) identifying the strategies employed by service organizations to overcome
the marketing problems they face;
(3) determining whether different service types use different service
strategies as implied, but not tested, by Silvestro et al. (1992) and
Lovelock (1983); and
(4) continuing assessment of the impact of service marketing strategies on
an organization's profitability, customer retention, and the level of
customer satisfaction as expressed by its customers.
Notes
1. Assessment to make sure that the sample firms clearly fell within the appropirate
classification group was conducted by cross-referencing the sample list with an
independent business directory of New Zealand firms indicating primary business
activity. Additionally, it should be noted that firms were included in the sample by SBU,
so as to focus as much as possible on single activity organizations. Any firm that did not
clearly fit within the classification group after the cross-referencing process was
eliminated from the sample. Because Silvestro et al.'s (1992) classification scheme was
being used to create the independent variables so as to distiguish between service firms,
the researchers felt justified in manipulating the random sample in this way. Silvestro et
al's classification scheme was being applied to an empirical investigation, but was not in
itself being tested or refined.
2. It should be noted that Scheffe's test in particular is very conservative (Hair et al., 1995).
When Duncan's multi-range test was used instead of Scheffe's test it found significant
differences did exist between all three service types and consequently indicated that H10
and H11 should be fully supported.

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JOURNAL OF SERVICES MARKETING, VOL. 14 NO. 7 2000

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Appendix. Questionnaire items

Construct one: communication

Alpha coefficient
0.70

Experience qualities
(1) This organization's new customers do not really understand our service until they have
experienced it.
(2) In most cases, the only real way we can get new customers to understand our service fully
is to get them to experience it.
(3) Our customers need to experience our service to fully understand it.
Sensory depravation
(1) This organization's customers cannot see, feel, taste, or touch our service, and as a
consequence we find it difficult to communicate our service to them.
(2) In most cases, it is difficult to communicate our service to customers because they cannot
see, feel, taste, or touch the service.
Construct two: diffusion

0.74

(1) In most cases, the rate of customer adoption for our innovation new service is slow.
(2) In most cases, our customers are at first resistant to adopting our innovative new service.
(3) Our customers usually accept our new innovative services quickly.*
Construct three: protection

0.79

(1) Our organization finds it almost impossible to stop competitors copying the services we
offer.
(2) Our organization can do little to stop competitors from copying our services.
(3) Our organization has no legal way of stopping our services being copied.
(4) This organization's competitors are unable to copy our service because we legally protect
several surrounding elements (i.e. equipment, brand names, etc.).*
Construct four: cost calculation

0.83

Fixed costs proportionment

(1) Variation in the time it takes to perform our service means it is extremely difficult to
determine what proportion of fixed cost each customer should pay.
(2) Our organization finds it difficult to determine what proportion of fixed costs should be
charged to each customer.
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(3) In our organization the proportion of fixed costs each customer should pay is difficult to
calculate.
Standard unit definition
(1) Our organization finds it difficult to determine what constitutes one unit of our service.
(2) Our organization finds it difficult to calculate what the performance of one unit of service
costs our organization.
Construct five: price setting

0.78

Price cost linkage

(1) Our customers find it difficult to understand how we determine the prices we charge for
our service.
(2) Our customers find it difficult to see the linkage between the value of our service and the
price we charge.
(3) Our customers struggle to see how we come up with our prices.
Inconsistent service performances
(1) Our organization cannot set fixed prices prior to performing the service.
(2) Our organization finds it extremely difficult to fix a price prior to performing the service.
Construct six: customer involvement in production

0.70

Quality dependence
(1) Our service quality is heavily dependent on the quality of the information provided by our
customers.
(2) In most cases the higher the quality of customer input the higher the quality of the service
we are able to provide.
(3) In this organization service quality varies depending on the quality of customer input.
(4) In most cases, high quality input from customers is a prerequisite for high quality service.
Productivity dependence
(1) In this organization when customers provide assistance in service production, productivity
increases.
(2) Our organization finds it difficult to increase productivity because the customer is
involved in the production process.
(3) In this organization productivity varies from one customer to another depending on the
extent that the customer participates in service production.
Process visibility
(1) In this organization the majority of the service performance is seen by our customers.
(2) In this organization almost all the elements involved in performing our service can be
seen by our customers.
Construct seven: inter-client interaction

0.72

Inter-client conflict
(1) In this organization one disruptive customer can ruin the quality of our service for others.*
(2) In our organization customer satisfaction can easily be adversely affected by other
customers being disruptive.*
(3) Our organization has in the past been forced to reprimand customers because they were
disrupting other customers using our service.*
Queue formation
(1) Our customers often have to queue before being served.
(2) In this organization customers rarely have to queue before being served.
JOURNAL OF SERVICES MARKETING, VOL. 14 NO. 7 2000

591

(3) In our organization our customers are often forced to queue.

Construct eight: provider representation

0.65

(1) This organization's customers generally believe that the quality of the person providing
the service is a direct reflection of the quality of the whole organization.
(2) Our customers associate the quality of the person providing the service with the quality of
the whole organization.
Construct nine: mass production centralisation

0.82

(1) Our customers tend to have differing needs making standardisation of our service very
difficult.
(2) In our organization achieving a high level of standardisation is almost impossible.
(3) Our service performances cannot be easily standardised.
Construct ten: quality control

0.84

Quality standard precision

(1) Our organization finds it very difficult to set precise quality standards.
(2) In most cases, variability in the performance of our service precludes the use of precise
quality standards.
(3) Variation in our service means determining precise quality standards is almost impossible.
Controllability
(1) Our organization finds it extremely difficult to control the quality of our service.
(2) In this organization quality is very difficult to control.
(3) Our organization can easily control the quality of our service.*
Construct eleven: promotion

0.65

(1) Our promotion/advertising is often very specific about what the customer will receive.*
(2) Our advertising efforts tend to include mainly general information about our service.
(3) Variation in our service means our promotion/advertising cannot be specific about what
each customer will receive.
Construct twelve: inventory

0.68

(1) Our service cannot be stored.

(2) Our service cannot be stocked.
Construct thirteen: demand/supply synchronization

0.68

(1) Our organization finds balancing supply and demand to be a major problem.
(2) In our organization a major difficulty is that demand does not remain constant.
(3) Our level of supply cannot easily be adjusted to match fluctuating demand.
(4) In our organization the cost of supply and demand imbalances is considerable.
Construct fourteen: customer control

0.79

(1) Our customers are heavily dependent on the knowledge and advice of the people who
provide our service.
(2) In this organization the people who provide our service are usually considered ``experts''
or ``professionals'' by customers.
*reverse coded items

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This summary has been

provided to allow managers
and executives a rapid
appreciation of the content
of this article. Those with a
particular interest in the
topic covered may then read
the article in toto to take
advantage of the more
comprehensive description
of the research undertaken
and its results to get the full
benefit of the material
present

Executive summary and implications for managers and

executives
Classification of services
Clemes et al. examine the marketing problems faced by different categories
of service, based on Silvestro et al.'s classification of services into:
.

Professional services, such as consultants, corporate banks, doctors and

architects. These are service organizations with relatively few transactions, which are highly customized, process-orientated and have
relatively long customer contact times. Most value is added in the front
office, where considerable judgement is applied in meeting customer
needs.
Service shops, such as retail banks, rental services and hotels. These
services display moderate degrees of customization and discretion, a
mixture of people and equipment, and value is added in both the front
and back office.
Mass services, such as telecommunication, bus services and fast foods.
These are service organizations with many customer transactions,
involving limited contact time and little customization. The services are
mainly product-orientated, with most of the value being added in the
back office and little judgement applied by front office staff.

Of course, the categories are not water-tight. While most of the operations of
retail banks, for example, fall into the ``service shops'' category,
withdrawing money from a cash machine is more like a ``mass'' service.
Common marketing problems
Clemes et al. collected information from 145 marketing managers employed
by a wide range of service organizations in New Zealand. The survey reveals
that all experienced the following marketing problems to the same extent:
.

.
.

.
.

services as performances or experiences are often mentally difficult for

the customer to grasp;
services can easily be copied;
customers can negatively affect the service experience of others around
them;
the service provider is often seen as the whole service rather than only
part of it;
supply and demand can be difficult to match; and
services, unlike goods, cannot be ``stored'' at quiet times for use when
things get busy.

Problems most affecting professional services

There are, however, a number of marketing problems which different
categories of service provider experience to different extents. Professional
services experience greatest difficulty displaying and communicating their
services, calculating costs accurately, setting prices, promoting their
services and controlling service quality. To circumvent these problems,
providers of professional services should stress word-of-mouth
communication, provide tangible cues where possible, use uniquely
attributable costs and opt for perceived value pricing.
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Customer involvement in the production process

Service shops experience a number of marketing problems to a lesser degree
than professional services but to a greater degree than mass services. But the
problem of consumers being involved in the production process of services
causes greater difficulties for service shops than it does for the other two
categories. This may be because the customers of service shops may demand
a higher level of customization than the organization, which has to deal with
quite large numbers of people, is prepared to offer or is capable of
providing. In addition, managers of service shops may insist on giving
employees less discretion than customers desire.
The design and layout of physical facilities, staff selection and training and
customer education are examples of areas that must be improved if service
shops are to overcome the problems created by customers being involved in
the production process.
The problem of customer control
Mass services experience the problem of customers feeling no tangible
ownership of the service to a greater extent than both professional services
and service shops. This may be because consumers are not heavily involved
in the production of a mass service, and these services tend to be more
standardized than customized. Another reason may be that other customers
may be present during the service encounter, causing a sense of crowding
and loss of control.
Ways of reducing customers' feelings of lack of control include increasing
the level of customization, grouping like customers together, establishing
customer codes of conduct or creating a physical environment which
enhances customer compatibility. Managers should also try to provide the
customer with as much choice as possible to maintain his or her sense of
control over the situation. This might include express lanes, call-backs or
other means of achieving the service outcome.
(A precis of the article ``An investigation of marketing problems across
service typologies''. Supplied by Marketing Consultants for MCB University
Press.)

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