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From Dr. Scott Sampson's Understanding Services Businesses Book (click for table of contents)
—[in Unit 9: Marketing in Services]— Next⇒SBP 9b: The Who's Who of Marketing

SBP 9a: The Marketing of Properties

With services, the products tend to be high in experience properties and low in search properties. Highly divergent services are often high in credence properties.

Why it occurs

This principle occurs because customers recognize that customer inputs results in the need for nonstandard production. In other words, they are concerned about the process experienced in service delivery, and they do not expect (nor often want) the outcome to be exactly the same as other customers experienced.

Details

Marketing scientists refer to three general types of product features, or properties: search properties, experience properties, and credence properties. (In this discussion a “product” might be a manufactured goods product or a service product.) These property types are distinguished as follows:

  • Search properties are product characteristics that customers can easily evaluate and compare prior to purchasing the product. Search properties help the customer search for the best product to purchase. They are often objective measures of product performance, such as speed, capacity, or energy requirements. Automobiles can be evaluated for their acceleration, cubic feet of inside space, and miles per gallon of fuel. Refrigerators can be compared based on their holding space and energy efficiency. Prepackaged food items are advertised for their nutritional components and speed of preparation. For each of these items, customers can gather information and make comparisons prior to the time they make a purchase.
  • Experience properties are product characteristics that cannot be evaluated prior to purchase, but must be experienced by the customer in order to be evaluated. Marketers may attempt to describe these properties in advertising, but ultimately customers realize that evaluating them requires experiencing the product. Disney may say their theme parks are among the most delightful vacations, but the customer really needs to visit the park to know. So also for architects, barber shops, banks, home builders, hotels, Internet Service Providers, real estate agencies, retail stores, and zoos–it is difficult for a customer to do a comparative evaluation of “product” characteristics without actually experiencing what is offered.

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* Credence properties are product characteristics which cannot be easily evaluated even after the customer has experienced the product–instead the customer has to rely on the evaluation given by a credible source. The reason they cannot be evaluated is that the typical customer does not have enough knowledge or expertise to make an accurate evaluation. As a result, customers wind up relying on the opinion of supposed “experts,” who give an evaluation and make comparisons. For example, how does a college graduate know he or she received a good education? How do a law firm's clients know they received the best legal advise? How does the client of a consulting firm know the consultant's recommendations are the best? In each of these cases, the customer largely has to take the company's word for it, or the word of others esteemed to know.

This service principle indicates that a fundamental difference between the properties of manufactured goods and the properties of services is that manufactured goods tend to be rich in search properties, whereas services are predominantly latent with experience properties.1) An exception is that some services rely so much on the expert opinions of the service provider (i.e. they are highly divergent processes) that the evaluation itself has to rely on expert opinion–in other words these services are high in credence properties.

This is not to say that services do not contain some search properties, nor that manufactured goods do not contain some experience or credence properties. Indeed, different goods or services contain different combinations of the three. Yet we should expect the dominant characteristics of goods or services to tend to fit in the categories as described above.

How it affects decisions

Companies need to decide the most appropriate way to market their goods or services. The most appropriate way to market something will depend on the types of properties it possesses.

What to do about it

For companies who produce superior manufactured goods, heavy in search properties, the product characteristics can be easily described to customers in advertising. Further, customers can seek out (search) for product information without actually having to make a purchase and without having to rely on the opinions of others. Customers can use that product information to compare competing products, and pick whichever product is deemed to be the superior one to fill the need.

For services which predominantly possess experience properties, a way to effectively market a superior service is to give customers the opportunity to experience it on some type of a trial basis (such as a reduced-cost initial visit). Another way is to encourage those who have experienced it to relate the observations to other prospective customers. The service itself is marketed in-process, or during actual service delivery (which concept will be discussed further in the next Service Business Principle).

For highly-divergent services where credence properties dominate, it is not enough to get customers to experience the service–customers need credible opinions of others to tell them that the service is superior. This credible opinion might come from prior customers, from independent service critics, or from credible friends and associates of prospective customers.

For example

CreditCard These days there are many companies attempting to market various types of credit cards. A primary property of credit cards used as a selling point is their convenience relative to other forms of payment or credit. (Which is in fact the major ethical problem with many credit cards–providing such convenient “easy credit” that it tempts many people to go into unnecessary debt.) To a minor degree, “convenience” is a search property, in that it can be somewhat described to prospective customers in terms of the number of businesses that accept a particular credit card. One particular credit card company touts that their card is “Accepted in more locations…” including some where ”…they don't take American Express” (the competing card). The reason convenience is limited as a search property is because the significance of scope of acceptance of a card is only defined by the actual businesses each customer ever patronizes. (Customers probably do not care whether a card is accepted at businesses they never patronize.) So, in a large sense, “convenience” is an experience property. Card issuers believe that if customers try their credit card, they will come to see how convenient it is and want to continue to use it. One way issuers lure customers into trying their card is to offer sign-up bonuses such as frequent flier miles or other gifts. Another way to lure customers is to charge “introductory” interest rates for a period such as the first six months. These introductory rates are significantly lower than the subsequent rate–and customers who intend to cancel the credit card after the introductory rate period are likely to forget. (Which is why it is generally a good idea for customers to evaluate the card based on the subsequent rate.)

Consulting firms largely provide an advice service–taking the client company's business situation as an input, processing with analysis and expertise, and giving recommendations as the service “product.” The process characteristic of being “expert” (or “well-informed”) is not much of a search property–it would be difficult to describe objective measures of expertise that could be compared across consulting firms. In some sense, “expertise” is an experience property–once a client experiences the good work of the consulting firm, they might see how expert the advice really is (or appears to be). As an experience property, consulting firms might offer free initial consultation, or might rely heavily on referrals from clients who have already experienced the expertise. However, the highly divergent (i.e. judgment-based) nature of the consulting process is such that even when clients experience the service they may still find it difficult to judge the expertise–the hallmark of a credence property. Therefore, the consulting firm may attempt to promote their services by relying on evaluations from sources that clients would deem credible. For example, some consulting firms have promotional material which describes the successful “Fortune 500” companies that they have had as clients. The idea might be that large, successful, companies like that would know expert consulting when they saw it. (Which may or may not be a valid assumption, depending on the case.)

My airline example

Air transportation is a generic enough process that it can be extremely difficult to describe significant objective ways in which one airline is better than another. As a result, we would conclude that airlines are not intense in substantial search properties. Yet an example of an airline search property would be “where they fly,” which can be evaluated prior to purchase by checking the flight schedule. This, however, is simply a service qualifier–a passenger would consider any airline that flies to where they want to go.

In perhaps a larger sense, airlines have major properties that are experience properties. Customers will only learn the difference in service by actually taking a flight. Some airlines offer promotional fares, which can encourage having the experience, or companion-fares which encourage passengers to bring someone else along. Nevertheless, it is often hard to judge even from taking a flight if there is any difference between that airline and competing airlines. Each flight experience may be different from each other flight, and each interaction with an airline employee may be completely different from each other interaction.

In fact, there is quite a bit of divergence that can be experienced in the air travel process, such as in the interactions with airline employees. (Certainly not as much as the surgery or the legal council process, but still some.) How could a customer evaluate an airline based on the few interactions they experience? Not easily. So, airlines might tout the information of experts who are supposedly able to evaluate issues like customer service. For example, a recent Southwest Airlines advertisement described the airline as winning a supposedly prestigious customer service award three years in a row. The customers could then rely on the evaluative ability of the group producing the award to evaluate the service.

How manufacturing differs

With manufacturing, all customers are generally concerned about is the outcome of the production process, which is the finished-goods product. Finished-goods products are often consistent. Also, they can usually can be measured in quantitative ways which are easily advertised and compared between competing products.

Analysis questions

  1. Can the service “product” be easily evaluated by the customer prior to purchase? If so, what are these “search” properties and how might they be described?
  2. What is the relative influence of advertising, word-of-mouth recommendations, and actual experience? How might we get prospective customers to initially experience the service?
  3. If the service is highly divergent and driven by credence properties, what types of credible opinions would help in promoting the service?
  4. What does all of this say about the appropriate marketing strategy for this service?

Application exercise

List five or more characteristics of your company's service that are potentially its biggest selling points–and tell whether each is a search, experience, or credence property. Create a flier that would be used to promote service based on a few of the major characteristics. For search properties, you will probably describe objective information about the characteristic. For experience properties, you will likely want to encourage or draw on the experience of the service. For credence properties, you will probably need to refer to a credible source of characteristic evaluation.

1) Heskett, J. L., Sasser, W. E., Jr., and Hart, C. W. L. (1990). Service Breakthroughs: Changing the Rules of the Game, The Free Press, New York, page 37.