1. Service and Service Marketing
The term 'service' can be defined as an act of doing something for someone. Service is by
far non-material and an intangible entity. So a service can easily be distinguished from a product
which can be held and owned. Service cannot be owned as it is consumed at the point of
purchase.
Characteristics of a Service:
1. Service cannot be owned
Service can be experienced and not owned. Service lasts for a limited period of time. The
staff at McDonald's may provide you with excellent service but we cannot own the
service or the staff for ever.
2. Service is intangible
We cannot hold, touch or feel a service with our hands. Unlike a product, service is
intangible. However service may have a tangible component. For instance home
insurance certificate can be touched and felt but the monetary service it provides is
intangible.
The implications of the intangible nature of service can be the following:
a. As a result service cannot be inventoried.
b. Service cannot be patented.
c. Due to its intangible nature service cannot be easily displayed or communicated.
d. Intangible nature makes pricing difficult for service.
3. Inseparability
Service and service providers are inseparable. On the other hand a product can be
separated from its producer. A producer manufactures cycles and sells it to the buyer. The
cycle no longer remains with the producer. A service for instance at a restaurant is
provided by the staff in terms of hospitality, prompt delivery etc. These services are all a
part of the service production process and remain at or near the point of purchase.

2. Therefore service is simultaneously produced and consumed. The implications of this
peculiar nature of service are:
a. Mass production of service is difficult.
b. Decentralization may be essential.
c. Customers not only participate in the transaction but also affect it.
d. Customers also affect each other.
e. Along with this employees greatly affect the service outcome.
4. Perishable
Services do not last forever. It is unlike a product which can be owned and stored for later
use. A service once bought is consumed there and then. When we buy an air ticket the
service bought shall last only till the destination is reached. After that it perishes. As a
result it is difficult to synchronise supply and demand with services.
Another implication of perishability can be that service cannot be returned or resold.
5. Heterogeneous
It is very unlikely that two service experiences will be the same. When we buy tickets to
a musical concert it is not possible that the performance would be identical to the
performance next day. A singer is bound to be different in each performance as he cannot
standardise each note. However the service providers take great care in making the
experience similar each time. The service staffs are specially trained for this effect
however subtle differences always occur. A passenger travelling by the same flight will
not get the same quality of service each time as the air hostess might be more or less
experiences than the former.
The implications of heterogeneity can be listed as following:
a. Customer satisfaction and service delivery depends upon employee actions.
b. Many uncontrollable factors determine the quality of service provided.
c. In spite of training and planning there is no assurance that the quality of service delivered
would be the same as what was planned and promoted.
The differences between product and services are summarised as below:
Product Services
Tangible Intangible

3. Standardised Heterogeneous
Production separate
from consumption
Simultaneous production
and consumption
Non-perishable Perishable
Examples of Service Industries
Examples of service industries are as following:
1. Health Care The health care industry includes hospitals, medical practice, dentistry, eye
care etc.
2. Professional Services Accounting, legal, architectural etc are included in the category of
professional services.
3. Financial Services This industry includes banking, investment, insurance, advising etc.
4. Hospitality This service industry includes restaurant, hotel, motel, bed and breakfast, ski
resort, rafting etc.
5. Travel Travel industry includes airlines, travel agencies, theme parks etc.
6. Others Some other examples of service industries can be hair styling, pest control,
plumbing, lawn maintenance, counselling services, health club etc
It is a challenging task to manage a service or product industry. These challenges however are
different and unique for each industry. Some of the challenges that are faced while managing,
growing and making profit from a service industry are discussed below, these factors do not
readily apply to the product industry.
1. Services are intangible and so customers cannot see or hold them before they buy it.
Buyers are therefore uncertain about the quality of service and feel they are taking a risk.

4. The buyer is unable to conceptualize and evaluate a service from beforehand. From the
seller's perspective he finds it challenging to promote, control quality and set the price of
the service he is provide. Unlike products the intangible nature of service causes
difficulties to both client and the firm.
2. Defining and improving quality in the service industry is a major challenge. Unlike
products very often services are produced and consumed simultaneously. As a result
service quality management faces challenges that the product industry never ever comes
across. In the product industry the manufacturer gets ample opportunity to test his
products before they reach the market. In case of a quality issue the problem is taken care
of during the quality check and customer satisfaction is taken care of. However during
service production the customer is right in front. To guarantee customer satisfaction in
this scenario is a major challenge.
3. In case of the service industry the customer first needs to develop trust in the service
organization before he buys their services. The client often gives more importance to the
amount of faith he has on the service organization than the services being offered and
their value proposition.
4. Service industry faces competition not only from fellow service industry but also from
their clients who often question themselves whether or not they should engage a service
at all!
5. Most of the product companies have dedicated sales staff while in the service industry the
service deliverers often do the selling. Coordinating marketing, operations and human
resource efforts is a tedious task.
6. Passion works for the service industry. More the passion, spirit and desire among the
service staff more is the revenue generation and success generated every day. There is a
direct correlation between staff passion and financial success and similarly lack of
passion leads to failure in the service industry. Staffs need to be constantly motivated and
efforts have to make to sustain employee commitment.

5. 7. While testing new services is a constant challenge communicating about these services
simultaneously is also not easy.
8. Setting prices does not come easily for service industry.
9. Standardization versus personalization is another major issue the service industry has to
face.