An Introduction to Services

Marketing
Defining services
• “Activities, benefits and satisfactions, which are offered
for sale or are provided in connection with the sale of
goods”
• (American Marketing Association, Committee of
Definitions 1960, p. 21).
• “Services include all economic activities whose output
is not a physical product or construction, is generally
consumed at the time it is produced, and provides added
• value in forms (such as convenience,
amusement,timeliness, comfort or health) that are
essentially intangible concerns of its first purchaser”
(Quinn, Baruch and Paquette, 1987).
• The Special Characteristics ofServices
• Intangibility
• Inseparability of production and consumption
• Heterogeneity
• Perish ability
The Intangibility of Services (I)
• It refers to the total lack or perception of a
service’scharacteristics before and (often) after it is performed
• The term was first used in 1963 (Regan)
• It is the most radical characteristic of services, where from the
others emanate Marketing implications
• Great marketing skills in tangibile, intangible offerings, i.e., in
surrounding them with “hard” peripheral attributes
• Technical superiority and long term vision in new service
development, in order to protect a service from its non
patentability
• Special pricing know-how, i.e., what is the cost of a service?
• Creative communications skills, i.e., what message to
communicate?
• The Intangibility of Services (II)
• Criticism to the distinguishing power of
intangibility
• The inability of customers to physically
evaluate
• services is also the case in some goods
• Repeated use of a service nullifies intangibility
• Many goods have intangible elements too
• Tangible dominant
• Products
• Soft drinks
• Detergents
• Automobiles
• Cosmetics
• Fast-food outlets
• Intangible
• dominant products
• Advertising
• agencies Airlines
• Investment
• management
• Consulting
• Teaching
• The Product Tangibility Spectrum
The Inseparability of Services (I)
• It refers to the simultaneous production and
consumption of services
• The production process of services has been
called “servuction” process (Eiglier and
Langeard, 1977)
• The customer is present when the service is
produced
• The customer plays a role in the servuction and
the delivery process
• Customers interact with one another during the
servuction process and may be affected
(positively or negatively) by this interaction
The Inseparability of Services (II)
• Marketing implications,Mass production of services is
difficult, if possible at all
• No significant economies can be earned from
centralization of operations, since the service must be
produced at the convenience of customers (temporal
and physical)
• Service quality depends highly on what happens in real
time, i.e., during the service encounter
• Since customers have a vital role in the servuction and
delivery process, the service provider needs great skills
to train them how to play their role
• The service provider must prove excellence each time
the serviceis produced
• The service provider needs skills in order to tackle
disruptions in the servuction process, caused by
problem customers
• The Heterogeneity of Services (I)
• It refers to the potential for high variability in the performance
and the
• quality of services, caused by the interaction between the service
employee and the customer
• The performance of the employees delivering one same service
varies:
• Between different hour zones of the day From employee to
employee From service company to service company
• Not all customers play their role at the service encounter in a
homogenous and predictable way
• Heterogeneity is particularly the case with labour intensive and
high-contact services
• Heterogeneity is less visible in technology-based services
The Perishability of Services
• It refers to the fact that services cannot be saved, stored, resold or
returned
• Difficulties in synchronising supply and demand for services
• Marketing implications Need for developing an as accurate as
possible demand forecasting mechanism
• Need for a creative plan for capacity utilisation
• Need for the implementation of strategies and actions to
accommodate malcontent customers from non-returnable services
• Criticism to the adequacy of perishability as a line of demarcation
between goods and services
• “Under conditions of fierce competition and financial stringency, the
impact on profit of unsold stocks is as severe for manufacturers of
fast moving consumer goods as it is for the service industry”
• (Middleton, 1983)
The Expanded Marketing Mix for Services: 3 More Ps (I)
• People
• All humans who play a role in service delivery and who influence
• the perceptions of customers (Zeithaml and Bitner, 1996)
• Service delivery employees (front-line staff)
• The general staff of the service company
• The customer
• The other customers that are present in the servuction and delivery
process
• Physical Evidence
• The setting where the service is delivered (Zeithaml and Bitner,
1996)
• Where the service company and the customer interact
• Any tangible components that facilitate performance or
communication of the service
• The Service Industry
• Transportation services
• Communication services
• Wholesale and trade
• Retailing
• Financial services (banking, insurance, real estate etc.)
• Tourism services
• Health services
• Auto repair services
• Business services
• Legal services
• Government services
• Education