AJAI.K.G SM Zephdyut Module - I

What is a Service?
 “Any act or performance that one party can offer to

another that is essentially intangible and does not
result in ownership of anything.
 Its production may or may not be tied to a physical

product”. „Kotler‟
 According to AMA, “activities, benefits, or satisfactions

that are offered for sale, or provided in connection
with the sale of goods”.
Why do customers need to
buy Services?
 Services are activities offered for sale that provide
valuable benefits or satisfactions,
 activities that he cannot perform for himself or that

he chooses not to perform for himself.
 That is in some services, the marketer competes with

the customer itself.
 That is, if the customer chooses to do the activities

that comprise the service, the business would lost.
What is a Service?...
 Eg; instead of hiring the services of a gardener or a
car cleaner he may do these tasks by himself.
 Gummesson defines service as, “something which can

be bought and sold but which you cannot drop on
your foot”.
 That is services are not physical, they are

dimensionless.
 They are intangible and, therefore, they cannot be

dropped.
What is a Service?...
 Gronroos defines services as, “an activity or series of
activities of more or less intangible nature,
 that normally, not necessarily, take place in

interactions between that customer and service
employees and or
 physical resources or goods and or
 system of the service provider, which are provided as

solution to customer problems”.
 That is it highlights the important characteristics of

services, that is
What are Services
Characteristics of Services
 Services are intangible.
 They do not result in ownership of anything.
 Services are activities performed by the provider.
 Customer interaction with the provider is integral to

service creation and consumption.
 Services are actions bought for their ability to create

satisfaction.
 Service production may sometimes be tied to goods.

Unique Features of Services
Services are Performed, Not Produced:
 While products are produced, services are

performed.
 Eg: when a customer avails of lessons in physical

fitness in a gym, he avails of a service, nothing is
produced.
Services do not involve any ownership transfer:
 Unlike in product marketing, in service marketing

there is no title / ownership transfer.
Unique Features of Services…
 Eg: when a ticket for a cinema is purchased, the
customer only buys the right to view the cinema, he
does not own anything.
Intangibility:
 Unlike physical products, services are intangible, they

cannot seen, touched or smelt.
 Because of this feature, the customer cannot sample a

service in advance,
 he has no tangibles to go by and it becomes difficult
for him to judge a service before it is bought,
 he cannot know the exact outcome in advance.
Inseparability/Immediacy:
 Services are produced and consumed simultaneously

at the same point of time and location.
 Eg: in a beauty salon, the consultant performs a facial

for the customer, the latter receives it then and there.
 Services are also inseparable from the providers of
the service, the provider/performer is an integral part
of the service delivery.
 Eg: the beautician who gives the make up is

inseparable from the process.
Variability/Heterogeneity:
 The inseparability of the service from the provider

leads to some variability,
 that is variability automatically enters the picture,
depending on the person performing the service.
 Eg: in the beauty salon example, the same facial make

up may be performed differently by two different
consultants.
 And the same consultant may do it differently on

another occasion.
 That is services in general are highly people intensive.

 While products are standard products coming out of
an assembly line.
 The effect of the service varies dependent on when

and where the service is provided.
 Eg: a cup of coffee served and consumed in a road

side dhabha and the same coffee served and
consumed in an air conditioned, modern coffee cafe
are two different experiences.
Perishability:
 Services are non inventorial, that is it cannot stored.
 That is they are produced and consumed

simultaneously.
 For example, airlines charge passengers who fail to

show up at the time of flight departure.
 This is done because the service value becomes zero

once the passengers fail to show up at the appointed
time, the offer cannot be stored for use later.
Consumer:A part of the production process:
 In most services, the consumer is an integral

participant in the production process, as he has to be
physically present when the service is produced.
 Eg: in the beauty salon, as the consultant performs the

make up, the customer receives it, and both together
complete the production consumption process.
Services Differ from Products in Channels Too:
 Services differ significantly from physical products

even in the role played by marketing
channels/intermediaries.
 Eg: the salon may have some franchises/branches to

serve more areas,
 but a service order placed at a particular outlet

cannot travel through that network, it has to be
delivered/performed on the spot.
Goods Versus Services
Characteristics Goods Services
Out Put Tangible Intangible
Product Uniformity Generally uniform Variable out put
output
Value carrier A thing A process or activities
Return Can be returned back Cannot be returned
Ownership Possible Not possible
Stock Inventoriable Non inventoriable
Distribution Mass distribution Localized distribution
possible
Mechanization Generally high Generally low
Goods Versus Services…
Characteristics Goods Services
Customer Low or no involvement High involvement
involvement
Facility location Near input supply Close to customer
Producer status Separable from goods Inseparable from

services
Customer role Customer as only Customer as producer
customer also
Product and Separate both in time Must take place
consumption and in place simultaneously.
Tangibility Intangibility Continuum
/ Tangibility Spectrum
The Nature of Market Offer
Pure Goods Salt, Book, Sugar
Goods major, Service minor Cars, Computers, Televisions
Tangible and intangible equal Fast food restaurants
Service major, Goods minor Airlines, Advertising, Education
Pure service Babysitting, Legal advice,

Psychotherapy
Marketing Implications of the
Unique Features
Implications of Intangibility:
 First, because of the intangibility, the customer relies
more on subjective impressions and less on concrete
evidence, in assessing the quality of a service.
 Second, prescribing standards of quality in a service
situation is also difficult.
 Third, intangibility also implies that the customer has
to have faith in the person providing the service and
 has to go by trust to a large extent in judging the
service quality.
Unique Features…
Tracking Intangibility:
 Highlight the benefits: the marketer can tackle the

intangibility factor by highlighting the benefits of the
service.
 Airline companies often cite aspects such as the

number of happy customers flew in a year,
 the number of flights they operate between two

important cities,
 the convenient flight timings etc.

Unique Features…
 Focus on the tangible and visible aspects: the
appearance of the settings,
 the quality of facilities and equipment,
 their brand image,
 the qualifications and the training received by the staff
are all solid elements that can be highlighted.
 Eg: Singapore Airlines plays up the unique comfort of
its seat, the seat‟s spaciousness, its angles, and the way
the seat spreads out as a bed during long night
journeys.
Unique Features…
 The service marketers can also use visualization to tackle
the inherent intangibility.
 Eg: hotels/resorts highlight their interiors, their ambience
and their location.
Unique Features…
 Associate the service with certain easily
perceived objects and ideas: the marketer can
overcome the intangibility by associating the service
with certain easily perceived objects and ideas.
 Eg: the case of package tours.
 Use well known and credible personalities in

promotion: service marketers can also bring in a
tangible element by using testimonials from well
known and credible personalities and promoting the
service.
Unique Features…
 Build reputation and use it for promotion: over
a period of time reputation which is usually an
intangible element, may become a very tangible
element in the perception of the customers.
 It is through such reputation for reliability in travel

arrangements that Thomas Cook has become
synonymous with travel.
Unique Features…
 Focus on the product component: marketer can
overcome the intangibility of the service to some
extent by drawing attention to the product
component.
 The restaurant can claim it is giving fresh and tasty

food.,
 the multiplex can say its screens are digital and that it
can run seven shows at a time.
Unique Features…
 Manage the evidence emanating from the
service: service consumers will be looking for some
signals or evidence regarding the quality of the
service.
 Implications of Inseparability:
 Customers, while receiving the services have direct

interaction with the service personnel.
 The quality of this interaction will have a major say in

the final experience of the customer.
Unique Features…
Trackling Inseparability:
 Because of the inseparability factor, customers judge

the quality of a service based on the person
performing the service.
 Often customers insist that a particular person

provide the service for them.
 This can be tackled to some extent by some degree

of automation,
Unique Features…
 standardizing the service performance process step
by step and ensuring that the process is handled the
same way by all service personnel.
Implications of Variability/Heterogeneity:
 The variability factor often leaves the consumer

confused, that is,
 he/she feels that service performance is a non

standard affair, varying widely and dependent on who
actually performs the service.
Unique Features…
Tackling Variability:
 The problem of variability can be overcome to an

extent by putting groups of personnel in charge of
service, rather than one or two specified individuals.
 Second, by systematically coaching every service

person in the organization,
 the standard of everyone can be raised to a uniformly

high level.
Unique Features…
 Reducing the human element and enhancing
mechanization and automation is another solution.
 In services such as restaurants, the product

component, that is, food in this case, is amenable for
standardization and measurement, and
 the customers expectation on that front can be met.
 But even here part of the process relating to cooking

and serving are individual centric with more scope
for variations.
Unique Features…
Implications of Perishability:
 The fact that service supply cannot be easily

increased or decreased so as to match the changes in
demand compounds the problem.
 As a combined effect of the perishability factor and

the fluctuating nature of demand,
 service marketing has to face special problems in

product planning, capacity planning, production
scheduling and pricing.
Unique Features…
Tackling Perishability:
 Differential pricing is an option for matching demand

and supply better.
 The peak time demand can be reduced and non peak

time demand cultivated.
 Eg: airlines generally release more promotional seats

on all Tuesdays which is a lean day in the week, even
in peak season.
Classification of Services
 Classification of services are based on two general
dimensions such as,
 what is being processed, whether is it a person or an

object, and
 how is it being processed?
 That is, what is the nature of the process (tangible

or intangible actions).
Classification of Service based on
Tangible action
 Services for People: here the service is delivered by people

to people.
 Services for Goods: here services are given by people for
object or goods.
Classification of Service based on
Intangible action
 Services directed at people’s mind: services sold through

influencing the creativity of humans are classified on the basis
of intangibility.
 Services directed at intangible assets: are some of the
services most difficult to price and quantify.
Classification of Services…
 A more general classification of services based on the
type of function that is provided through them can be
as:
 Business services.
 Communication services.
 Construction and related engineering services.
 Distribution services.
 Educational services.
Classification of Services…
 Environmental services.
 Financial services.
 Health related and social services.
 Tourism and travel related services.
 Recreational, cultural, and sporting services.
 Transport services.
Factors contributing to the
Growth of Services
Increasing Levels of Income:
 According to Ernst Engel, when the family income

increases, the percentage of money spent on food and
durables drops while the consumption of services
increases.
 The rise in income fosters the desire for a better

quality of life,
 this resulted in huge demand for services like

entertainment, health care, education, travel, retailing,
hotels , and restaurants, and banking.
Growth of Services…
Urbanization:
 Urbanization is proposed to be one of the major

reason for the growth of the services.
 Some of the services are typically related to urban

lifestyle, for example,
 transportation, repairs and maintenance,

housekeeping, dry cleaning and laundry, babysitting,
education, training, counseling, health care, fitness,
restaurants and entertainment.
Women in the Workforce:
 One of the direct consequences of women‟s

participation in the economic activity outside home is
that women have very less or no time to spend on
the household activities.
 That created market for services like household

services, babysitters, day care centres, cleaning
services, dial a meal services and restaurants.
Demographic Shifts:
 One of the important demographic changes is that
the life expectancy has increased phenomenally.
 When people live longer, they become consumers of
services, like:
 entertainment, recreation, financial planning, health
services, insurance, old age homes etc.
 Ageing is directly creating jobs in services like medical
assistance, home health help, diagnostic services and
radiologists.
Government:
 In a developing country like India, the government is

spending lot of money on services like education,
health care, social security, telecommunication and
infrastructure.
 The growth of the government is certainly a factor

that is responsible for the growth of service sector.
Industrialization:
 When the business in the industrial sector expands,

this gives rise to services that are essential for the
efficient and effective operation of business.
 The services that have got the boost because of this

include:
 advertising, logistics, retailing, event management,

public relations, placement services, training services,
insurance, banking legal services and management
consulting.
More Leisure Time:
 People across the world want increasingly more

leisure time to engage in personal and family
activities.
 There is a significant change in defining the holidays

or leisure period even in the semi urban and rural
pockets of India.
Growth in the Population of DINKs:
 The term DINK – dual income, no kids – refers to

couples too busy with their respective careers to
have children.
 More often that not, such people postpone starting a

family till it is too late to do so.
 In some societies, where divorce rate is high, marriage

is perceived as a short term relationship.
 DINK couples spend liberally on services.

Greater Complexity of Products:
 The rapid pace of change in technology offers greater
choice,
 allowing people to regularly use increasingly complex
products such as computers, television, kitchen
appliances, and
 so on that need specialists for maintenance and
repair.
 Therefore, the demand for such services is growing
day by day.
Greater Complexity in Life:
 In today‟s society, people are required to play a

number of roles.
 There is a demand for such services that can reduce

or share their burden.
 As such, there is an increased demand for income tax

consultants, legal consultants, counseling, employment
services, labor supply services, baby care centers and
so on.
Greater Concern for Ecology:
 The governments of various countries have taken the

responsibility to promote various public organizations
to protect the environment from pollution and other
hazards and
 to maintain the ecology through the conservation of

forests, protection of animals, birds, insects and other
important species.
 Eg: Vana Mahotsav,Water Conservation, etc.

Growth of Services in India
 In India, the service sector has emerged as the
dominant component of the economy.
 The services sector has been enhancing its

contribution to the country‟s GDP, and
 it was 42.55 per cent in 1990-1991 and in 2013-2014,

it became 60 percent.
 During the period, the services sector grew at a

CAGR of 8.1 per cent compared to 6.5 per cent
overall economic growth.
Growth of Services in India…
 India‟s services story began with knowledge intensive
firms leveraging the rapid technological changes post
the IT revolution.
 Technology facilitated new ways of doing business via

increasing computing power, data storage capacity
and data transmission capacity.
 Telecom connectivity has grown at a dramatic pace,

and today we have the second largest mobile
subscriber base in the world with over two thirds of
the Indian population having access.
 Financial services is the another subsector that has
greatly expanded.
 Higher education is one more.
 Health care has in fact become the fastest growing

sector of the economy.
 Entertainment too is now among the fastest growing

services,
 spending on hotels and restaurants has grown

significantly.
 Emergence of modern services, such as call centers,
mobile telecom service, ATMs, Internet service and
consultancy services of different kinds,
 have particularly grown fast and contributed to the

fast expansion of the service sector.
 Hospitality is another sector, one survey estimates

that India is likely to have around 50 international
hotel brands by 2020.
 IT, ITeS, BPO, and KPO are all bound to grow.

 According to IBEF, the service sector has contributed
54.17 per cent of India‟s Gross Value Added at current
price in 2018-19.
 Net service exports stood at US$ 60.25 billion in April-
December 2018.
 India‟s earnings from medical tourism could exceed US$ 9
billion by 2020.
 The Indian facilities management market is expected to
grow at 17 per cent CAGR between 2015 and 2020 and
 surpass the US$19 billion mark supported by booming
real estate, retail, and hospitality sectors.
Common Hindrances in
Various Services
Restaurant and fine dining:
 Improper portions
 Inordinate waiting
 Not being directed
 Cold and indifferent service personnel
 Incorrect billing
 Indifferent response to customer requests

Various Services…
 Failure recovery only when asked
 Smelly environment
 Compromised hygiene
 Anticipation of customer needs and response to

problems.
Mobile communication:
 Call drop
 Lack of transparency
Various Services…
 Unsolicited promotional messages and calls
 Complicated process
 Customer service
 Poor coverage
 Network congestion
 Excess billing.
Various Services…
Education:
 Inadequate infrastructure
 Teaching methodology
 Untrained teachers
 Big class sizes
 Lack of transparency
Various Services…
 Promotion of other businesses incidental to
education
 Exploitative orientation
 Poor interpersonal
 Hidden charges.
Various Services…
Air transportation:
 Lack of communication
 Unexplained delays
 Cold and indifferent staff
 Gruff/rough/harsh employees
 Punctuality
 Unclear announcements
Various Services…
 Poor situation handling when things go wrong
 Unwillingness to help
 Inability to anticipate customer needs
 False promise.
Retailing:
 Inadequate parking
 Billing errors
Various Services…
 Long queues
 Poorly informed staff
 Layout and displays
 Bothersome return policy
 Computer related problems at the cash registers
 Incomplete assortment
 Unhelpful employees
 Stale perishable items.
Challenges for Service
Organizations
 Some of the most common challenges faced by
organizations are:
 Services are intangible and so customers cannot see

or hold them before they buy it.
 The buyer is unable to conceptualize and evaluate a

service from beforehand.
 From the seller's perspective he finds it challenging to

promote, control quality and set the price of the
service he provides.
Organizations…
 Unlike products very often services are produced and
consumed simultaneously.
 As a result service quality management faces

challenges that the product industry never ever
comes across.
 During service production the customer is right in

front.
 To guarantee customer satisfaction in this scenario is

a major challenge.
Organizations…
 In case of the service industry the customer first
needs to develop trust in the service organization
before he buys their services.
 The client often gives more importance to the

amount of faith he has on the service organization
than the services being offered and their value
proposition.
 Service industry faces competition not only from

fellow service industry but also from,
Organizations…
 their clients who often question themselves whether
or not they should engage a service at all.
 Most of the product companies have dedicated sales

staff,
 while in the service industry the service deliverers

often do the selling.
 Coordinating marketing, operations and human

resource efforts is a tedious task.
 Passion works for the service industry.

Organizations…
 More the passion, spirit and desire among the service
staff more is the revenue generation and success
generated every day.
 There is a direct correlation between staff passion

and financial success and similarly lack of passion
leads to failure in the service industry.
 Staffs need to be constantly motivated and efforts

have to make to sustain employee commitment.
MACFAST
Thank You…
Dr. Ajai Krishnan G
References
 Harsh V. Varma – Services Marketing – Text & Cases – 2nd Ed. –
Pearson
 K. Rama Mohana Rao. Services Marketing, 2013. – 2nd Ed. – Pearson
 Ramaswamy, Namakumari. Marketing Management – Indian Context.
Global Perspective. 2018. – 6th Ed. – SAGE
 Christopher Lovelock, JochenWirtz, Jayanta Chatterjee – Services
Marketing: People,Technology, Strategy – 8th Ed. – Pearson
 Marie J. Bitner, Valarie A. Zeithaml – Services Marketing – Tata
McGraw Hill
 Helen Woodruffe – Services Marketing – Longmen Group
 Adrian Payne – The Essence of Services Marketing – Prentice Hall
India.

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What is a Service?

 “Any act or performance that one party can offer to

 Its production may or may not be tied to a physical

 According to AMA, “activities, benefits, or satisfactions

 activities that he cannot perform for himself or that

 That is in some services, the marketer competes with

 That is, if the customer chooses to do the activities

 Gummesson defines service as, “something which can

 That is services are not physical, they are

 They are intangible and, therefore, they cannot be

 that normally, not necessarily, take place in

 physical resources or goods and or

 system of the service provider, which are provided as

 That is it highlights the important characteristics of

 They do not result in ownership of anything.

 Services are activities performed by the provider.

 Customer interaction with the provider is integral to

 Services are actions bought for their ability to create

 Service production may sometimes be tied to goods.

 While products are produced, services are

 Eg: when a customer avails of lessons in physical

Services do not involve any ownership transfer:

 Unlike in product marketing, in service marketing

 Unlike physical products, services are intangible, they

 Because of this feature, the customer cannot sample a

 he cannot know the exact outcome in advance.

 Services are produced and consumed simultaneously

 Eg: in a beauty salon, the consultant performs a facial

 Eg: the beautician who gives the make up is

 The inseparability of the service from the provider

 Eg: in the beauty salon example, the same facial make

 And the same consultant may do it differently on

 That is services in general are highly people intensive.

 The effect of the service varies dependent on when

 Eg: a cup of coffee served and consumed in a road

 Services are non inventorial, that is it cannot stored.

 That is they are produced and consumed

 For example, airlines charge passengers who fail to

 This is done because the service value becomes zero

 In most services, the consumer is an integral

 Eg: in the beauty salon, as the consultant performs the

 Services differ significantly from physical products

 Eg: the salon may have some franchises/branches to

 but a service order placed at a particular outlet

Producer status Separable from goods Inseparable from

Goods major, Service minor Cars, Computers, Televisions

Tangible and intangible equal Fast food restaurants

Service major, Goods minor Airlines, Advertising, Education

Pure service Babysitting, Legal advice,

 Highlight the benefits: the marketer can tackle the

 Airline companies often cite aspects such as the

 the number of flights they operate between two

 the convenient flight timings etc.

 Eg: the case of package tours.

 Use well known and credible personalities in

 It is through such reputation for reliability in travel

 The restaurant can claim it is giving fresh and tasty

 Customers, while receiving the services have direct

 The quality of this interaction will have a major say in

 Because of the inseparability factor, customers judge

 Often customers insist that a particular person

 This can be tackled to some extent by some degree

 The variability factor often leaves the consumer

 he/she feels that service performance is a non