This document provides an overview of services marketing. It begins by discussing the distinction between goods and services, noting that the line is sometimes blurred. Historically, goods were tangible objects that could be owned, while services were intangible deeds or performances. More recent definitions characterize services as activities offered by one party to another, often time-based, that create value through access rather than ownership. The document also notes that most industries have both tangible and intangible aspects and that services make up over half of GDP in most developed economies. Principal services industries include business, finance, healthcare, entertainment and hospitality.
3. The distinction between goods and
services is not always perfectly
clear!
4. Services: Historical View
Goods (Commodities) were objects of value over
which ownership rights could be established and
exchanged. Ownership implied tangible possession
of an object that had been acquired through
purchase, barter, gift from the producer or previous
owner and was legally identifiable as a property of
the current owner.
(18th-19th Century)
5. Services: Historical View
Adam Smith distinguished between outputs of what
he termed “Productive” and “unproductive labour”.
Goods are those that could be stored after
production and subsequently exchanged for money
or other items of value.
Unproductive labour, however honourable, useful ot
necessary created services that perished at the time
of production and therefore didn’t contribute to
wealth
(Wealth of Nations, 1776)
6. Services: Historical View
Production and consumption were inseparable in
services and are thus “Immaterial Products.”
(Jean Baptiste)
7. Earlier definition – Hoffman et.al.
Goods are objects, devices or things, whereas
Services are deeds, efforts or performances
Ultimately, the primary difference between
goods and services is the property of
intangibility and perishability
- Hoffman
8. “There are no such things as service
industries. There are only industries
whose service components are
greater or less than those of other
industries… Everybody is in service.”
-Levitt.
10. New Definition – Lovelock et.al.
Services are economic activities offered by one
party to another. Often time-based,
performances bring about desired results to
recipients, objects or other assets for which
purchasers have responsibility.
In exchange of money time and effort, service
customers expect value from access from
goods, labour, professional skills, facilities,
networks, and systems, but they do not
normally take ownership of any physical
elements involved.
11. The Emphasis …
While customers expect value from their service
purchases, in exchange of money, time and effort,
this value comes from access to a variety of value-
creating elements rather than transfer of ownership.
12. Ultimately, the primary
difference between goods and
services is the property of
intangibility and perishability
14. Scale of Market Entities: Lessons
Scale of market entities reveal two important lessons:
There is no such thing as pure product or services
Tangible aspects of an intangible dominant product
and intangible aspects of a tangible products are
important sources of differentiation.
15. Importance of Services
Services contributed 64% to the world GDP in 2008
while agriculture’s share was 4% and manufacturing
share was 32 %
16. Estimated Size of Service Sector As a % of
GDP
Jersey (97%), Cayman Islands (95%), Hong Kong (92%)
Bahamas(90%), Bermuda (89%), Luxembourg(86%)
USA (79%), Fiji(78%), Barbados (78%), Panama (78%), France (77%), UK (76%),
Belgium (75%)
USA (79%), Fiji(78%), Barbados (78%), Panama (78%), France (77%), UK (76%),
Belgium (75%)
Japan (72%), Taiwan (71%), Australia (71%), Italy (71%)
Canada (70%), Germany (69%), Singapore (67%), Israel (67%)
S Africa (65%), Brazil (66%), Poland (65%), 64%)
Turkey (63%), Mexico (62%), Croatia (61%), S Korea
(64%)
Argentina (57%), Russia(55%), Phillipines (54%),
India(55%)
Malaysia (46%), Chile (45%), Thailand (44%)
Indonesia (41%), China (40%),
S Arabia (35%), Laos(27%),
Source: The World Fact book 2008, CIA, USA
17. Name some of the principal
industries in the Service Sector?
18. Principal Industries in the Service Sector
Business & professional services
Finance, Insurance
Wholesale/ retail trade
Healthcare
Entertainment
Hospitality
Tourism
And so on
21. Customer-
perceived value
Total customer
benefit
Total customer
cost
Product benefit
Monetary
cost
Services
benefit
Time
cost
Personal
benefit
Switching
cost
Image
benefit
Psychological
cost
Determinants
of Customer
Perceived Value
Editor's Notes
Customers estimate which offer they believe—for whatever reason—will deliver the most perceived value and act on it.
