Understanding Service

Concept-Features-Characteristic
What are Services ?
• Services are those separately identifiable , essentially intangible activities
which provide want-satisfaction and are not necessarily tied to the sale of
a product or another service.

Activities like Repairs ,Entertainment , hotel

accommodation, medical care , transportation ,
personal care, Dry cleaning , Education are all
services
 Performed
by:Individual
Machine,
Individual and
Machine

Service is : an Rendered for :

SERVICE Profit
activity deed
performance Not for profit
effort

Directed to :
Customers
Customer’s
possession
Business Users
 Major Differences Between Products and
Services
• There are several major differences, including:
• The buyer purchases are intangible
• The service may be based on the reputation of a single person
• It's more difficult to compare the quality of similar services
• The buyer cannot return the service
• Service Marketing mix adds 3 more p's, i.e. people, physical environment
and Process
 Delivery of a service
• The delivery of a service typically involves five factors:
• The service providers (e.g. the people)
• Equipment used to provide the service (e.g. vehicles, cash registers)
• The physical facilities (e.g. buildings, parking, waiting rooms)
• The client
• Other customers at the service delivery location
• Customer contact
 Critical factors for success
• Focus on customers
• Caring for employees
• Identification of value drivers
• Deploying technology to a firm’s advantage
• Demand management
• Adequate systems

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 Dimension of Service Management

Tangible Dimensions relates to the more concrete evidence of a

service actually taking place. It also includes the physical
evidence of the service such as service environment , the
appearance of the service personnel , the equipment or
facilities used to carry out the service etc.
Intangible Dimensions are usually the core aspects of the service , the
actual process , deed , act , performance central to the service delivery
Accessibility Dimensions refers to the approachability , availability and
ease of contact with the service company. It will include the ease with
which the service company may be reached by telephone or e-mail , the
waiting time to receive or experience the service, the opening hours or
hours of operation and the location of the service
Reliability Dimensions entails the consistency of service performance and
dependability. It also includes providing accurate bills and performing the
service at the designated time
Responsiveness Dimension concerns the willingness and readiness of staff
to deliver the service and respond to customer’s requirements. It may
involve mailing information or transaction details immediately, calling
customers back promptly when promised and giving prompt service.
Communication Dimensions involves communicating with customers in a
language they understand, listening to their request and responding
appropriately Common areas of customer communication include
‘educating’ the customer about a service, providing some interpretation of
a particular issue or providing guidance with a specific service problem.
 Competence Dimension
• It refer to the ability of the service company to actually deliver the
service.It entail ensuring that staff possess the appropriate skills and
knowledge to perform the service including the knowledge and skill of the
contract personnel,operational support personnel and the overall capability
of the service firm.
 Courtesy Dimension
• It encompasses the politeness,respect,consideration and friendliness of
contract personnel and service delivery staff. It includes staff and
management having consideration for consumer’s property and being
properly prepared for customers.
 Credibility Dimension
• It concerns the trustworthiness, believability and honesty experienced
during the service encounter. Wider issue such as reputation of the
company and its staff, and other businesses or stakeholder associated with
the company in addition to the personnel characteristic of the contact
personnel will also have an overall impact on perception of the
organisational credibility.
 Security Dimension
• It relate to how secure, free from danger, risk or doubt consumers feel
during interaction with the service. In a service situation this will impact
upon both physical safety and financial confidentiality.
 Empathy Dimension
• Empathy and understanding the customer is one of the most intangible
dimensions in practice. It involves understanding and having empathy
with individual customers need and requirements and responding to these
in an appropriate manner.
 Image Dimension
• The concept of image is as a mental representation of reality sustained by
an individual or group.This dimension entails the combined experience
and assessment of many other factors and is link with both the whole
service experience and previous knowledge of the company.
 How are services traded?
• The GATS defines trade in services in terms of modes of supply: •
• Mode 1 covers services supplied from one country to another (for example, call centre
services). •
• Mode 2 covers consumers or firms making use of a service in another country (for
example, through international tourism). •
• Mode 3 covers a foreign company setting up subsidiaries or branches to provide services
in another country (such as a bank setting up a branch overseas). •
• Mode 4 covers individuals travelling from their own country to supply services in
another (for example, a consultant travelling abroad to provide an IT service).
• Mode 2 is by far the most liberalized mode in terms of commitments by WTO
members. This is mostly due to governments being less likely to restrict the
movements of citizens outside domestic borders (e.g. tourists). Mode 1 is not
often committed, mostly because it is impossible for many services to be
supplied remotely (e.g. construction services), while mode 3 is more open,
reflecting its crucial role in driving the international supply of services,
transferring know-how and improving the capacity of economies to participate
in global value chains. Mode 4 has the lowest depth of commitments, probably
due to a number of sensitivities involved with the movement of foreign workers.
 General Agreement on Trade in Services
(GATS)
• The WTO’s General Agreement on Trade in Services (GATS) provides the
legal ground rules for international trade in services, allowing WTO
members the flexibility to open their markets to foreign competition to the
extent of their choosing.
• The services sector is the key driver of India’s economic growth. The
sector contributed around 66.1 per cent of its Gross Value Added growth
in 2015-16, thereby becoming an important net foreign exchange earner
and the most attractive sector for FDI (Foreign Direct Investment)
inflows.
• The Indian services sector has attracted the highest amount of FDI equity
inflows in the period April 2000-March 2016, amounting to about US$
50.79 billion which is about 17.6 per cent of the total foreign inflows,
according to the Department of Industrial Policy and Promotion (DIPP).
 Characteristic of Services

Services cannot be touched.

It is difficult to achieve standardisation in services.
Services do not involve transfer of ownership.
Patent protection is not possible.
Production and consumption of services is simultaneous.
Services are not inventoriable
The role of middlemen is different.
 Characteristic of Services
Service Characteristics, Effects and Challenges
Characteristics Effects Challenges
1.Intangibility Service products tends to To tangibilise the product
be invisible and with the aid of a marketing
impalpable. mix so that customer search
and evaluation is
facilitated.
2.Inseperability Buyer and service provider The service factory must
are brought together combine retail outlets, limit
simultaneously on scale of distribution, and
production and ensure that service
consumption of a service. personnel are not only
efficient in technical skills
but also in interpersonal
skills.
3.Perishability Services are not inventoriable To tackle difficulty in matching
the supply with demand; let the
marketing emphasis be on
demand management.

4.Participation The customers actively To solicit cooperation from

participates in service customers
production, either by extending
physical cooperation or
informational inputs

5.Variability Labour intensiveness, To bring consistency in service

intangibility and customer output ( standardization) by
participation together makes determining, implementation
service output subject to and control of specifications and
variations. mechanization.
 The Four I's Of service
• Intangibility
• Inconsistency
• Inseparability
• Inventory
 Intangibility
• Service cannot be stored
• Service cannot be patented legally and hence can be easily copied by
competitors.
• Service cannot be readily displayed or easily communicated to
customers leading to difficult in assessing the quality.
• Decisions regarding advertising and promotions are difficult.
• Pricing is difficult as it is hard to determine the actual cost of a “unit of
service” and price/quality relationship is complex.
• It is less efficient than goods production.
• Design of total service package is not possible.

For example: Services rendered by banks, restaurants, airlines etc. An airline

traveller cannot know the kind of experience he is going to have during a flight at the
time of making the purchase for the first time. 29
Intangibility - Emerging Marketing strategy

Some of the possible solutions to overcome intangibility

problems of services can be:
• Use tangible cues
• Stimulate manage and promote word of mouth
communication.
• Use personal sources of information more than non-
personal sources.
• Use post purchase communications
• Strengthening internal and external marketing.
• Use relationship marketing
• Create strong organisational image.
• Use cost accounting to help set prices.
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 Inseparability
• Centralized mass production is difficult if not impossible.
• Customer experience depends upon action of employees and
interaction between employees and customers.
• Operations need to be decentralized so that service can be
delivered directly to consumers in convenient locations.
• Due to simultaneous production and consumption, the customer
involvement is high and this may affect the outcome of the
service transaction.
• Involvement of other customers in the production process.
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 Inseparability - Emerging Marketing
strategy
• Need strong selecting and training programmes for public contact
personnel
• Strong incentives and motivations to always satisfy the customer
• Use multi-site locations.
• Innovating techniques of indirect interaction.
• Standardisation to maximum extent possible.
• Consumer Management
• Focus on personal attention
• Develop distribution network with quality control mechanism
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 Variability/Inconsistency

• Standardisation is difficult to achieve.

• Hard to set up a quality control.
• Quality can be determined only after the service has been
performed.
• Not possible to communicate what exactly the customer is going
to receive.

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Variability/Inconsistency - Emerging Marketing strategy

• Stress standardisation and performance

• Focus on employee training programme, performance
evaluation and internal marketing.
• Consider licensing and other forms of credential requirements.
• Positioning variation as strength of innovation.
• Promote research and innovation.
• Industrialize service: Levitt 1972, “suggested specific
techniques to substitute organized pre-planned systems for
individual service operations. This strategy is the opposite of
customization”.
• Customize services.
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 Perishability/Inventory

• Value is short lived.

• Cannot be inventoried
• Time pressure in sales
• Capacity is finite

For example: An airline seat on a particular flight, if

not sold cannot be stored for sale during the next
flight.
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 Perishability/Inventory - Emerging
Marketing strategy
• Demand forecasting and creative planning for capacity utilization
to achieve a closer match between demand and supply.
• Use strategies to cope with fluctuating demand.
• Strong recovery strategies when things go wrong.
• Focus on competence and expertise
• Continuous study on demand patterns and competitive
parameters.
• Creative pricing like early bird specials.

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 Attributes of service

Basic attributes: these are absolutely necessary without which it is not possible to
function. Therefore, customers take them for granted. Their presence does not increase the
saleability of a service.
Articulated attributes: Customers think that these are desirable but not must. It is on
These, customers discriminate between companies.
Poor performance of these will lead to customer dissatisfaction and good performance will
lead to customer satisfaction
Exciting attributes: these would delight and surprise customers. Delivery of these will
develop strong loyalty of the customer. However attributes that are so stunning today may
become commonplace things tomorrow.