There are several characteristics of services which differentiate a service from a product.

These
are Perishability, Heterogeneity, Intangibility and ownership. Here we discuss further 7
characteristics which are critical and help you understand a service product better.

1) Services are sold exclusively on the basis of benefits they offer – Why is it that Accenture
has such a high brand equity? This is because of one single thing which they have commanded
over time – Trust. Thus this is one benefit to the service of Accenture which other companies
can hardly give. Therefore, word of mouth publicity and a good reputation are some benefits
which are critical to make a service brand over time. The first restaurant you try, is one
recommended by your friend.

2) Services cannot be made available in advance – If you were running a restaurant, can you
make all the dishes one day in advance and then serve the customer when he comes? No you
cant. All you can do is make the ingredients. Even fast food restaurants take care that the food is
replenished every single day. The simple reason behind this is that services cannot be stored.
They cannot be given in advance. They can be given only when a purchase of the services has
been made.

3) Time utility is critical – If you were a doctor, and you gave half an hour to each patient,
talking idle talks just to make him comfortable, you will probably lose the 10 customers sitting in
your lobby. In services, you charge by the amount of time a person consumes. Thus the way you
utilise your time is critical to the profitability of your business. A restaurant which does not have
any customers today, will have lost a lot of money in keeping the restaurant open, in labour
charges etc.

4) Services cannot be transferred – Outsourcing is the best example of non transference of

services. If you wanted to outsource your calls, can you bring the call centre to your country?
You cant. Because again the costing will go high. That is why call centres are in cheaper
countries. You cannot separate the process from the source. You will have to keep the call centre
services in one place and provide these services in another.

5) Services perish – The point is similar to perishability of services marketing. The concept is
simple – if you do not watch the movie now, you wont get a refund of the ticket. If you do not
board your plane or your train, you cannot ask back for the charges of the ticket. A service once
order, perishes, if it is left unused.

6) A service once consumed cannot be returned – You pay a doctor for consultation and
medicines. But your illness does not get cured or he is unable to find the source. Can you ask
your money back? You cannot. He gave you the service which you asked for. He might not ask
for money anymore or you can return the medicines and receive the money for the medicines.
Medicines are not a service. They are a product. The bottomline – you cannot return a service
once it has been consumed. In restaurants, you can return the dish if you dont like it, and ask for
another same one. But you cannot walk out of the restaurant without paying for the services.

7) Controlling the quality of services is difficult – My local auto service centre has one rule
for loyal customers – Do not give your bikes on weekends. The reason is quite simple. He has a
heavy workload on weekends as a result of which the quality of service is low. This is human
factor and the owner can hardly do anything. Even in a restaurant, the quality of food served or
the service given will vary during peak hours. Furthermore, as services are intangible, it is not
possible to measure the quality of service given. Thus controlling the quality of services over
time is very difficult as long as the human element is involved.

Overall these seven characteristics define a service. A hint here for a marketer / entrepreneur. Go
through each of these characteristics and find out where you can bring about an improvement in
your organization. I am sure even if you are meeting your customers satisfaction goals, there is
scope for exceeding customer expectations by analysing these seven characteristics of services.
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Services Marketing - Definition and

Characteristics
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Introduction

The world economy nowadays is increasingly characterized as a service economy. This is

primarily due to the increasing importance and share of the service sector in the economies of
most developed and developing countries. In fact, the growth of the service sector has long been
considered as indicative of a country’s economic progress.

Economic history tells us that all developing nations have invariably experienced a shift from
agriculture to industry and then to the service sector as the main stay of the economy.

This shift has also brought about a change in the definition of goods and services themselves. No
longer are goods considered separate from services. Rather, services now increasingly represent
an integral part of the product and this interconnectedness of goods and services is represented
on a goods-services continuum.

Definition and characteristics of Services

The American Marketing Association defines services as - “Activities, benefits and satisfactions
which are offered for sale or are provided in connection with the sale of goods.”

The defining characteristics of a service are:

Intangibility: Services are intangible and do not have a physical existence. Hence services
cannot be touched, held, tasted or smelt. This is most defining feature of a service and that which
primarily differentiates it from a product. Also, it poses a unique challenge to those engaged in
marketing a service as they need to attach tangible attributes to an otherwise intangible offering.

1. Heterogeneity/Variability: Given the very nature of services, each service offering is unique and
cannot be exactly repeated even by the same service provider. While products can be mass
produced and be homogenous the same is not true of services. eg: All burgers of a particular
flavor at McDonalds are almost identical. However, the same is not true of the service rendered
by the same counter staff consecutively to two customers.
2. Perishability: Services cannot be stored, saved, returned or resold once they have been used.
Once rendered to a customer the service is completely consumed and cannot be delivered to
another customer. eg: A customer dissatisfied with the services of a barber cannot return the
service of the haircut that was rendered to him. At the most he may decide not to visit that
particular barber in the future.
3. Inseparability/Simultaneity of production and consumption: This refers to the fact that
services are generated and consumed within the same time frame. Eg: a haircut is delivered to
and consumed by a customer simultaneously unlike, say, a takeaway burger which the customer
may consume even after a few hours of purchase. Moreover, it is very difficult to separate a
service from the service provider. Eg: the barber is necessarily a part of the service of a haircut
that he is delivering to his customer.

Types of Services

1. Core Services: A service that is the primary purpose of the transaction. Eg: a haircut or the
services of lawyer or teacher.
2. Supplementary Services: Services that are rendered as a corollary to the sale of a tangible
product. Eg: Home delivery options offered by restaurants above a minimum bill value.

Difference between Goods and Services

Given below are the fundamental differences between physical goods and services:
Goods Services

A physical commodity A process or activity

Tangible Intangible

Homogenous Heterogeneous

Production and distribution are separation from Production, distribution and consumption are
their consumption simultaneous processes

Can be stored Cannot be stored

Transfer of ownership is possible Transfer of ownership is not possible