GOODS AND SERVICES
GOODS
TANGIBLE.
Goods are objects, which
can be seen, felt, sensed
easily.
HOMOGENOUS/STANDA
RDISED
Goods have their own
standards & many goods
are alike.
PRODUCTION AND
DISTRIBUTION ARE
SEPERATED FROM
CONSUMPTION
Goods are produced first,
then sold, then consumed.
NON-PERISHABLE.
Goods can be stored in
inventory or resold or even
returned.
CORE VALUE
PRODUCED IN FACTORY
CUSTOMERS DO NOT
PARTICIPATE IN
PRODUCTION PROCESS.
SERVICES
INTANGIBLE.
Services are performance or actions,
which cannot be tasted, felt, touched.
E.G. health care services. (Treatment,
surgery)
HETEROGENOUS.
Services are frequently produced by
human beings so no two services will be
alike.
E.G. two different clients have different
service experience from the same tax
accountant.
SIMULTANEOUS PRODUCTION AND
CONSUMPTION.
Most services are sold first and then
produced and consumed
simultaneously.
E.G. restaurant services are sold first
dinning experience is produced and
consumed.
PERISHABLE.
Services cannot be saved, stored or
returned. E.G. bad haircut.
COREVALUE PRODUCED IN BUYER
SELLER INTERACTIONS.
CUSTOMERS PARTICIPATE IN THE
PRODUCTION.
RESULTING IMPLICATION
Services cannot be
inventoried. It cannot be
patented nor readily
displayed or communicated.
Pricing of services is very
difficult.
Service delivery and
customer satisfaction
depends on employee
actions. Service quality
depends on many
uncontrollable factors. There
is no sure knowledge that the
service delivered matches
what is planned.
Customers participate in &
affect the transaction.
customers affect each other.
Employees affect the service
outcome. Decentralization
may be essential. Mass
production is difficult.
It is difficult to synchronize
supply and demand in
services. Right quality has to
be delivered in the first
instance.
TRANSFER OF NO TRANSFER OF
OWNERSHIP A THING OWNERSHIP.ANACTIVITY/PROCESS

SERVICE MANAGEMENT

Service Management is :
1) To understand the utility the customers rceicve by consuming or using the service
offering of the organization
2) To understand how the organization (personnel, technology, physical resources,
systems and customers)will b able to produce and deliver this utility
3) To understand how the organization should be developed and managed so that
the intended quality can be achieved
4) To make the organization function so that this quality can be delivered on a
continuous basis

SOME DEFINITIONS :

** American Marketing association has defined services as “activities, benefits or

satisfactions, which are offered for sale or provided in connection with sale o goods”.
This definition took a limited view of services as it proposed that services are offered
only in connection with sale of goods.

** Robert Judd defined services as “ a market transaction by an enterprise or

entrepreneur, where the object of market transaction is other than the transfer of
ownership of a tangible commodity”

This recognised three broad areas of services

 The right to possess and use a product (rented goods service)
 The customs creation, repair, or improvement of a product (owned goods
service)
 No product elements but rather experience or what might be termed as
experiential possession (non-goods service)

** Blois defines services, as “a service is an activity offered for sale which yields
benefits and satisfactions without leading to physical change in the form of a good”
** Kotler and Bloom defines services as “an activity or benefit that one party can offer
to another that is essentially intangible and dos not result in the ownership of any thing.
Its production may not my not be tied up to a physical product”.

** Gummesson says, “ Services is something which can be bought and sold but which
you cannot drop on your foot”.

** According Gronross “a service is an activity or series of activities of more or less

intangible in nature that normally, not necessarily, take place in interactions between the
customer and the service employees and/or physical resources or goods and/or system of
the service provider, which are provided as solution to customer problems.”

From this it follows that

 Services are by and large activities, or a series of activities rather than things
 As a result they are intangible
 They take place in interaction between the customer and service provider –
which means that services are produced and consumed simultaneously
 Customer has a role to play in the production process as services are provided in
response to the problems of customers as a solution.

1.8 Characteristics of Services and its Marketing Implications

The main Characteristics of Services are :

 Intangibility
 Inseparability
 Heterogeneity
 Perishability

Intangibility

Services are actions and hence they are intangible. Due to this it is not possible to stock
services and hence fluctuations in demand becomes difficult to manage. Hotels have
same number of rooms all through the year but the customers requiring the room are
always varying with some months seeing very few customers while other months seeing a
rush of customers. Further services cannot be patented and any new concept can be
easily copied by competitors. These cannot be readily displayed or easily communicated,
and hence it will be difficult for the consumers to assess the quality. This also creates a
problem for what to include in advertisements and promotional materials. Further the
actual cost of “unit service” is difficult to determine and hence pricing becomes difficult.
Inseparability

Services are generally created or supplied simultaneously. They are inseparable. For
e.g., the entertainment industry, health experts and other professionals create and offer
their service at the same given time. Services and their providers are associated closely
and thus, not separable. Donald Cowell states ‘Goods are produced, sold and then
consumed whereas the services are sold and then produced and then consumed.’

A service is produced when it is consumed eg. a dinning experience. Thus the customers
re present when the service is produced thus other customer play an important role in
satisfaction. The service producer also plays an important role in quality. Thus mass
production is impossible, it is not possible to get economy of scale by centralisation,
operations has to be decentralised to deliver to the consumer directly at convenient
locations. A “problem customer” can result in disruption of service production process
creating a dissatisfaction for himself, other customers and also to the service producer.

Heterogeneity

As services are produced by humans, hence no two services can be identical. Further no
two customers are precisely alike and hence their experiences of the same service are
different. Even the same customer can be with different frame of mind at different times –
which results in differing satisfactions from the same service at different times.

Eg. A tax consultant may provide different a service experience to two different
customers on the same day depending upon their needs and on whether the consultant is
meeting the customer when he is fresh in the morning or tired at the end of the day.
Because of this ensuring a consistent quality becomes a challenging job. The quality
depends upon a number of factors like the customer, service provides, other customers
(their presence or even absence) etc., hence the service provider cannot know if the
service is delivered in a manner which has been originally planned and promoted.
Sometimes services are provided by a third party further increasing the heterogeneity.

Perishability

Services cannot be stored, saved, resold or returned. A bad haircut cannot be returned or
resold to another customer. Hence demand forecasting and creative planning to meet the
demand is a problem. Further one has to be right the first time or if things go wrong one
should have strong recovery strategies to retain the customer goodwill.
TEN SUCH QUALITIES WHICH INFLUENCE THE CONSUMER’S
EVALUATION OF SERVICES (Quality Dimensions of Services)

• Consistency: - it involves consistency and reliability of performances and

dependability. It means that the firm performs the service right the first time. It
also means that the firm honours its promises especially in terms of accuracy in
billing, record keeping and performing the service at the designated time.
• Concern:-it is the willingness or responsiveness of employees to provide the
service. It involves timeliness of service or giving prompt service, calling the
customer back quickly or mailing the transaction slip immediately.
• Competence: - it means having the required skills and knowledge to perform the
service. It involves knowledge and skill of the contact personnel, knowledge and
skill of operating support personnel and research capability of the organization.
E.g. securities brokerage firm.
• Contact:- it involves approachability, access and ease of contact. It means that
the service is easily accessible by telephone; waiting time to receive the services is
not extensive, convenient hours of operation and convenient location of service
facility.
• Courtesy:- it involves politeness, report, consideration and friendliness of contact
personnel. It includes consideration for the consumer’s property. Clean and neat
appearance of public contact personnel. E.g. no muddy shoes on the carpet,
proper telephone operators etc.
• Communication:- it means keeping consumers informed in a language that they
can understand and listen to them. It may mean that the company has to adjust its
language for different consumers – increasing the level of sophistication with a
well educated consumer and speaking simply and plainly with a novice. It involves
explaining the service itself and how much the service will cost explaining the
trade-off between service and cost and assuring the customer that a problem will
be handled.
• Credibility: - it involves trustworthiness, believability, honesty. It involves having
the customer’s best interest at heart thus contributing to credibility, company
name and reputation, personal characteristics of the contact personnel and degree
of hard sell involved in interaction with the customer.
• Confidentiality: - the security and the freedom from risk or doubt, involving
physical safety, financial security or confidentiality.
• Customer knowledge: - it involves making the effort to understand the customer’s
needs, i.e. learning the customer’s specific requirements, providing individualized
attention and recognizing the regular customer.
• Tangibles: - it includes physical evidence of the service, physical facilities, and
appearance of personnel tools or equipments used to provide the service, physical
representations of the service such as a plastic credit card or a bank statement and
other customers in the service facility.
REASONS FOR THE GROWTH OF SERVICE INDUSTRY

It is obvious that the growth in the services sector has been substantive. The reasons for
this growth are quite a few, some of which are summarized as follows.

• Affluence: - The increase in per capita income from Rupees 238.8 in 1950 to
Rupees 11,934.5 in 1998 is an indicator of he increase in general affluence has
given rise to service like pest-control, personal security, interior designer, etc.
• Leisure time: - People do get some time to travel and holiday and therefore there
is a need for travel agencies, resorts, hotels, and entertainment. There are other’s
who would like to utilize this time to improve their career prospects and therefore
there is a need for adult education/distance learning/part time courses.
• Life expectancy: - The health programmed have significantly contributed to an
increase in life expectancy given rise to services like old age homes, nursing
homes, health care, etc.
• Working wives: - As more and more women have started working, the need for
day care for children has increased, and so is the care with packed food and
home delivery.
• Product complexity: - A large no. of products are now being purchased in
households which can be serviced only by specialized persons like water purifies,
micro wave ovens, home computers, etc. giving rise to the need for services like
after sales service agents for durables, maintenance service providers, etc.
• Life complexity: - As the daily routine gets busier, individuals find it difficult to
manage things on their own. Their leads to an obvious need for tax consultants,
legal advisors, property advisers, etc.
• Resource scarcity and ecology: - As the natural resources are depleting and need
for conservation is increasing, we have seen the coming up of service providers
like pollution control agencies, car, pools, water management, etc.
• New products: - the development in information technology has given rise to
services like PCOs, Pager service providers, Web Shoppe, etc