These days, services have known an outstanding growth and have become an important part of economies (Avlonitis and Indounas 2007). Thus, more people work today on services, than ever before and services are no longer just an insignificant option linked to tangible goods (Palmer 2005). However, marketers cope with many issues in services due to its special characteristics, issues “that are not encountered by marketers of tangible goods” (Clemes et al 2000). Pricing is one of these issues as Berry and Yadav (1996) explained that “little research exists on the pricing of services and few people understand the special challenges involved». Similarly, Monroe and Kent (1989) have suggested that service providers have “a naive and unsophisticated approach to pricing». In this situation, it can be argued that service users could feel lost and quite uncertain about prices.
Thus, the purpose of this essay is to discuss the difficulty of comparing competitor's prices in a service context and to investigate its implications for setting up an effective pricing strategy. According to Berry and Yadav (1996), it is very complicated for customers to compare and evaluate prices in a service context. This is mainly due to the special characteristics of the services, especially the intangibility and the Heterogeneity (Zeithaml and Bitner 2000).
Rushton and Carson (1989) have argued that intangibility, or lack of physical attributes (Bebko 2000), is considered as the main and the most important characteristic of the service. Thus, because services are “intangible deeds and performances” (Zeithaml and Bitner 2000), they cannot be seen or touched in the same manner that we can see or touch tangible goods. Consequently, it makes the evaluation, before and after purchase, more difficult for customers (Rushton and Carson 1989). Levitt (1981) suggested that the intangibility is the main factor responsible for the evaluation problems for customers.
[...] Finally, it can be argued that the rapid growth of services in economies, and even in marketing research will facilitate the work of marketers for setting up efficient marketing strategies, especially in pricing. Furthermore, people realise the special challenges involved with services and services marketing is becoming a big academic field. So, even if few researches exist on pricing today, the importance of services will set up a new deal. Customers need more transparency from companies to understand the way they set up their prices. [...]
[...] Indeed, it creates a certain difficulty for customers to set up an accurate reference price and it increases the uncertainty about the knowledge of services' prices (Zeithaml and Bitner 2000). Under circumstances, customers cannot compare competitor's prices and even worse, they are unable to evaluate the price of the service before experiencing it. As well as intangibility, heterogeneity plays a role for customer's evaluation of prices. Many authors have argued that services cannot be exactly the same and can't be standardized (Zeithaml and Bitner (2000), Clemes et al because of many factors, such as people and customers' different behaviours, or even because the experience resulted from one service to another may differ from day to day, and from customer to customer. [...]
[...] Marketing of Services, American Marketing Association, Chicago, IL, pp. 5-9. Lovelock, C.H. and Wirtz, J. (2004), “Services Marketing: People Technology and Strategy”, 5th ed., Pearson/Prentice-Hall, Englewood Cliffs, NJ. Monroe. Kent. (1989),”The Pricing of Services,” Handbook of Services Marketing, ed. Carole A. Congram and Margaret L. Friedman (New York: AMACOM, 1989), pp 20-31. Nicoulaud, B. (1989), «Problems and Strategies in the International Marketing of Services", European Journal of Marketing, Vol Iss: pp.55 - 66 Palmer, A., (2005), “Principles of Services Marketing”, 4th Edition, McGraw Hill, Berkshire uk [...]
[...] These information tend to overwhelm the pricing strategy of firms in a service context, hence, companies have to take into account the difficulty for customers to evaluate the price and understand it, and that generates many pricing strategies. But, the problem is, no only consumer has problems with service's prices, even service marketers cannot evaluate and implement an effective and efficient pricing strategy taking account of its special characteristics. With regards to how consumer behaves with services' prices, we'll see below that many authors worked on how the firms have to implement services prices' to overcome these problems and many strategies were created to deal with the specificity of services .Indeed, marketers have to be conscious of the importance of pricing in developing businesses in services, and the atypical characteristics of services has to be understood (Berry and Yadav 1996). [...]
[...] (1996) “Capture and Communicate Value in the Pricing of Services”, Sloan Management Review summer, pp.41-51 Berry,L.L. Seiders, K. and Grewal, D. (2002), “Understanding Service Convenience”, Journal of Marketing (July), pp.1-17. Clemes, M. Mollenkopf, D. Burn,D. (2000), "An investigation of marketing problems across service [...]
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