Topic 1

4. Identify the unique characteristics of services and give examples of each.

Marketing experts acknowledge that marketing a service is more difficult than marketing
a tangible product. They identify the following as being characteristic of services:

Intangibility

Services are activities performed by the provider, unlike physical products they cannot be
seen, tasted, felt, heard or smelt before they are consumed. Since, services are not
tangibles, they do not have features that appeal to the customer’s senses, their evaluation,
unlike goods, is not possible before actual purchase and consumption. The marketer of
service cannot rely on product-based clues that the buyer generally employs in alternative
evaluation prior to purchase. So, as a result of this, the services are not known to the
customer before they take them. The service provider has to follow certain things to
improve the confidence of the client:

For example: Teaching, transportation, legal advices are services which have intangible
components. Restaurants, hotels, airline company and hospitals offer services in which
their services are combined with product (tangible objective), such as food in restaurants,
airplane or medicines in hospitals etc. These are tools that provide services to customers.

Inseparability

Services are typically produced and consumed simultaneously. In case of physical

products, they are manufactured into products, distributed through multiple resellers, and
consumed later. But, in case of services, it cannot be separated from the service provider.
Thus, the service provider would become a part of a service.

For example: Taxi operator drives taxi, and the passenger uses it. The presence of taxi
driver is essential to provide the service. The services cannot be produced now for
consumption at a later time. The physical presence of customer is essential in services
and cannot be separated. For example: to use the services of an airline, hotel, or doctor, a
customer must be physically present.

Perishibility

Services are perishable; they cannot be stored. Perishability does not pose too much of a
problem when demand for a service is steady, but in times of unusually high or low
demand service organizations can have severe difficulties. The services go waste if they
are not consumed simultaneously. This is a challenge for a service marketer. Therefore, a
marketer should effectively utilize the capacity without deteriorating the quality to meet
the demand.

For example, an empty seat on a plane is a lost opportunity forever. Restaurants are now
charging for reservations which are not kept, charges may be made for missed
appointments at the dental clinic.

Variability

Services are highly variable, as they depend on the service provider, and where and when
they are provided. Service marketers face a problem in standardizing their service, as it
varies with experienced hand, customer, time and firm. Service buyers are aware of this
variability. So, the service firms should make an effort to deliver high and consistent
quality in their service; and this is attained by selecting good and qualified personnel for
rendering the service.

For example, Burger King industrializes their operations. Industrialization refers to using
machines and standardized procedures to increase the productivity and efficiency of a
business. Employees are also trained to follow specific procedure. Using these two
industrialization procedures, customers can expect the same quality of food and services
at all Burger King’s locations.
Topic 2

3. Identify the internal, external, and firm-produced factors which impact the purchase
decision during the pre-purchase phase.

Internal Factors

There are four internal factors impact a consumer’s decision during the pre-purchase
phase: individual needs and wants of consumers, past experience, expectations, and level
of involvement. For example, the particular needs and wants of every customer
planning to buy a seat in the plane affect their choice of type of seating such as rich
customer want a first class seat in the plane.

If one’s past experience with a particular service firm has been positive, then the
likelihood one will purchase the service again from the same firm is greatly increased.
Therefore, past experience is important among the consumers.

The expectations consumer is another factor affecting the purchase decision. These
expectations are based on past experience, word-of-mouth communications, and
promotional materials. As expectations of a service firm increase, the likelihood of
patronizing that firm will increase.

The last factor is involvement level. Involvement refers to the level of mental and
physical effort exerted by a consumer in selecting a good or service. In high involvement
purchase decisions, consumers spend more time in information search, both internal and
external. They are also inclined to spend more time in deliberating and weighing the
alternatives. The level of involvement is affected by three factors: the knowledge and
experience the consumer has with a service, the financial risk involved, and the social
visibility of the service.

External Factors

There are three factors influence the purchase decision: competitive options available to
the consumer, the social context of the purchase, word-of-mouth communications.
There are many competitive options available to consumers. For example, in small
shopping mall, the customer may have only ten or twenty clothing outlet to choose from,
while in megamall such as Mid Valley, there may have fifty to sixty clothing outlet from
which to select.

The selection of a service will be influenced by the social context of the purchase. For
example, KFC, a fast food restaurant which may be suitable for children dinner may have
the type of atmosphere desirable for a birthday celebration.

Lastly, word-of-mouth communication is a vital part in external factors. Consumers

believe word-of-mouth communications are more reliable than company-sponsored
communications. For example, in deciding on an restaurant to have lunch, consumer
often ask others where they have their lunch and which restaurant they would
recommend.

Firm-Produced Factors

Promotions, pricing and the distribution system are firm-produced factors impacting the
purchase decision. Promotions include advertising, sales promotions, and personal
selling. Sales promotions used by service firms are coupons, premiums, sweepstakes, and
contests. All of these promotional efforts will influence consumer to purchase particular
services.

Pricing is an important element too. Consumers often compare the prices charged by
several vendors. They want the best value of the service offering. For example,
consumers often choose low fare airline company such as AirAsia as their flight
transportation comparing to higher fare airline company such as Malaysia Airline.

Distribution is defined as availability and accessibility of a service to consumers

including location, hours of operation, and access availability. For example, a bank has
main office but it may also operate branches and place ATMs at various locations.
Although actual bank hours are limited, customers have 24 hour a day access to their
accounts through ATMs.