“There are no such thing asservice industries. There are onlyindustries whose servicecomponents are greater or lessthan those of other industries.Everybody is in service.”-Theodore Levitt-
What is service?It is the part of the product or the fullproduct for which the customer iswilling to see value and pay for it.
What is service?“A service is an act or performance offeredby one party to another. Although theprocess may be tied to a physical product,the performance is transitory, oftenintangible in nature, and does not normallyresult in ownership of any of the factors ofproduction”.
What is service?“A service is an economic activity thatcreates value and provides benefits forcustomers at specific times and places bybringing about a desired change in, or onbehalf of, the recipient of the service”.
Characteristics of Services1. Intangibility-Services can not be tasted, felt, heard or smelt.-Intangibility creates a feeling of uncertainty.-Example: Banking services, Parlor.The process of a company making a servicetangible should include:a. Location and Physical Setting-Accessible, -Planned traffic flow, -Shortwaiting lines, -Attractive exterior design.
Characteristics of Services Cont..b. Employees and Agents-Sufficient in No., -Neat appearance,Sharpness and Knowledge.c. Hardware, Tools and Techniques-Latest hardwared. Communication-Speedy
Characteristics of Services Cont..2. Inseparability-Services can not be separated from theservice providers.-Inseparability creates problems in case ofmarket expansion.-Example: Banking services, Doctors andPatients, Waiter and Consumers
Characteristics of Services Cont..3. Variability/ Heterogeneity-Services are highly variable.-Problem in standardizing.Example: Experience of bus travelers,Receptionist.4. Perishability-Services can not be stored.-Creates problem when demand fluctuate.Example: Train that leaves the Railway station
Characteristics of Services Cont..5. Customer Participation-Service production is not a one-sidedactivity.Example: Medical treatment, Hair dressing,Health clubs, Colleges, Beautycare centres.6. No Ownership
Marketing Problems/Challengesand Strategic OptionsService Characteristic: IntangibilityMarketing Problems:• Can not be communicated easily.• Consumer suspects due to absence of concreteevidences.• Design of total service package not possible.• Comparative presentation is not possible.
Marketing Problems/Challengesand Strategic Options Cont..Strategic Options:• Making the service process tangible to themaximum possible extent.• Managing and promoting word-of-mouthcommunication.• Strengthening internal and externalmarketing.• Use of relationship marketing.
Marketing Problems/Challengesand Strategic Options Cont..Service Characteristic: InseparabilityMarketing Problems:• Problems of market expansion.• Maintenance of service quality.• Compulsory presence of consumers.• Limited production capacity.• Operation at limited capacity.
Marketing Problems/Challengesand Strategic Options Cont..Strategic Options:• Minimization of customer interactions.• Innovating techniques of indirect interaction.• Standardization to the maximum possibleextent.• Developing distribution network with qualitycontrol mechanisms.
Marketing Problems/Challengesand Strategic Options Cont..Service Characteristic: VariabilityMarketing Problems:• Limited scope for standardization.• Not possible to communicate exactly what theconsumer is going to receive.• Quality can be determined only after theservice is consumed.
Marketing Problems/Challengesand Strategic Options Cont..Strategic Options:• More focus on standardization.• Internal marketing and employee training.• Positioning variation as a strength ofinnovation.• Promote research and innovations.
Marketing Problems/Challengesand Strategic Options Cont..Service Characteristic: PerishabilityMarketing Problems:• Storage of service is not possible.• Sales volume continuously in relation tothe capacity.• Time pressure in sales.
Marketing Problems/Challengesand Strategic Options Cont..Strategic Options:• Demand management.• Capacity management.• Tactical management.• Continuous study on demand patterns andcompetitive parameters.
Marketing Problems/Challengesand Strategic Options Cont..Service Characteristic: Customer ParticipationMarketing Problems:• Customers are not controllable.• Production quality also depends uponcustomer’s knowledge and ability toparticipate.• Customers are evaluating at every stage ofservice production.
Marketing Problems/Challengesand Strategic Options Cont..Strategic Options:• Effective external marketing.• Customer education and training.• Effective interactive marketing.• Management of movements of truth.• Effective internal marketing.
Marketing Problems/Challengesand Strategic Options Cont..Service Characteristic: No OwnershipMarketing Problems:• Nothing remains after consumption.• Very less time to the consumer to evaluatethe product.• High consumer dissonance.
Marketing Problems/Challengesand Strategic Options Cont..Strategic Options:• Making communication tangible.• Customer relationship marketing.• Managing high level of company image.
Difference between physicalgoods and servicesPhysical goods ServicesPhysical goods are tangible Services are intangibleWhen a good is purchased, there issomething that can be seen,touched, perhaps smelled or wornServices can not be seen, felt, heardor smelt before they are boughtGoods are consumed, used andpossessed. It is easy for the seller todemonstrate or display the goodsServices are availed but notpossessed, therefore the absence oftangible features means that it isdifficult for the seller todemonstrate or display services andfor buyers to sample, test or make athorough evaluationIn goods customers do notparticipate in the productionprocessIn service customers participate inproduction process
Difference between physicalgoods and servicesPhysical goods ServicesIn goods core value processed infactoryIn service core value produced in thebuyer-seller interactionIn physical goods production anddistribution are separated fromconsumptionIn services production, distribution andconsumption are simultaneousprocessesPhysical goods can be kept in stock Services cannot be kept in stockFirm is able to store or transportphysical goodsFirm is unable to store or transportservices, only direct distribution ispossiblePhysical good is an object, a device, athingService is a deed, a performance, anactivity or process, an effort.
Difference between physicalgoods and servicesPhysical goods ServicesTransfer of ownership possible in goods No transfer of ownership in services.Physical goods are homogeneous Services are heterogeneousIt is possible to offer consistencyand uniformity of physical goods.Often impossible to assureconsistency in the services providedby a seller or to standardizeofferings among sellers of the sameservice