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Service Business Strategies: The Secret Sauce to Outshining Manufacturing Firms

Why Service-Based Companies Need a Different Game Plan

Service Business Strategies

Managing a service business is a whole different ball game compared to managing a manufacturing one. While many managers are aware of this, the nuances of why and how service businesses require distinct strategic thinking often remain a mystery.

This article delves into the unique challenges and strategic approaches essential for service-based businesses to thrive.


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Understanding the Difference: Service vs. Manufacturing

A pure service business is one where the service itself is the primary product offered. Unlike manufacturing businesses that produce tangible goods, service businesses deal with intangibles.

Think about your last hotel stay or your subscription to a streaming service. You can't touch or store these services, but their value is undeniable.


Key Differences in Strategic Management

  • Intangibility Services can't be seen, touched, or stored. This makes them challenging to market and sell. For instance, a customer can’t try out a spa service online before purchasing. This intangibility necessitates building strong brand trust and delivering consistently high-quality service to foster customer loyalty.

  • Inseparability Services are often produced and consumed simultaneously. For example, a haircut happens at the same time it is provided. This creates a direct interaction between the service provider and the customer, making employee training and customer service paramount.

  • Perishability Services can't be stored for later use. A missed doctor's appointment is a lost revenue opportunity that can't be reclaimed. This perishable nature requires efficient scheduling and demand forecasting to minimize losses.

  • Variability The quality of services can vary greatly depending on who provides them and when and where they are provided. Think about the difference between two different baristas making your coffee. Standardizing service quality through training and clear procedures is crucial.

Strategic Approaches for Service Businesses

  • Focus on Customer Experience Since services are intangible and often inseparable from their providers, ensuring a superior customer experience is critical. Companies like Zappos have built their reputation on exceptional customer service, which has become a cornerstone of their strategy.

  • Employee Training and Empowerment Employees are the face of any service business. Investing in their training and empowering them to make decisions can significantly enhance service quality and customer satisfaction. Ritz-Carlton is renowned for empowering its staff to go above and beyond to meet guest needs.

  • Technology Integration Leveraging technology to streamline operations, personalize services, and gather customer feedback can set a service business apart. Companies like Uber and Airbnb have revolutionized their industries by integrating cutting-edge technology with traditional services.

  • Building a Strong Brand Since customers can’t “try before they buy” with services, a strong, trustworthy brand can make all the difference. Think of how Apple’s brand convinces millions to buy its services like Apple Music and iCloud without hesitation.

Zappos: Delivering Happiness

Zappos, an online shoe and clothing retailer, focuses on delivering exceptional customer service. Their strategy includes a generous return policy, a 24/7 call center, and a corporate culture centered around employee happiness. This approach has led to high customer satisfaction and strong brand loyalty.

Airbnb: Revolutionizing Hospitality

Airbnb’s integration of technology with the traditional hospitality service has transformed the industry. Their user-friendly platform, combined with a robust review system, has built trust among users, allowing them to comfortably book stays worldwide.

Uber: Redefining Transportation

Uber’s use of a sophisticated app to connect drivers with passengers has not only made rides more accessible but has also introduced features like ride-sharing and upfront pricing, enhancing the overall user experience.

Visual Insights


Service businesses face unique challenges that require different strategic approaches compared to manufacturing firms. By focusing on customer experience, employee empowerment, technology integration, and brand building, service businesses can not only survive but thrive in a competitive market. For more insights and resources on managing service businesses, check out these links:



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