Contents

Unit 1: Introduction to Services

1.. Services
1.1.1. What are Services?
1.2. Services Sector in the Indian Economy
11.3 Components of Services Economy
114 Characteristics of Services
L14.1 Distinctive Characteristics of Services
1.14.2. Other Characteristics of Services
1.1.5/ Importance of Services
1.1.6. Classification of Services
1.1.7/ Players in Services Sector
1.1.8. Evolution of Service Sector
1.1.9. Growth of Service Sector
1.1.18.Importance of Service Sector
1.1.11. Importance of Services to Other Industries
1.1.12, Differences between Goods and Services
1.2.
Exercise
Introduction to Services (Unit 1) 13

Introduction to
UNIT 1| Services

1.1. SERVICES
1.1.1. What are Services?
Service is provided by seller to buyer in exchange of money (economic
activity) but it does not provide the ownership of the servíces provided
to the buyer, only values are exchanged. This is the feature that
distinguishes services from physical goods,Generally, it is regarded as a
process which is responsible for bringing change in the intangible as
well as physical belongings of the customers so as to benefit them.
As per the marketing experts, the term 'service' is not limited to
personal services like dentists' services, hair-cut, legal consult, auto
repairing, etc. The scope of the service is much more than that. Variety
of definition of service is given by different experts but no single
universal definition is available.

According to Philip Kotler, A service is an act or performance that

one party can offer to another that is essentially intangible and does not
result in the ownership of anything. Its production may or may not be
tied to a physical product".
According to Zeithaml and Bitner, "Services are deeds, processes and
performances'".

1.1.2. Services Sector in theIndian Economy

The service sector has established itself in the world economy as an
essential action leading to social as well as economic development of
any nation. It is characterised by higher productivity, employment and
growth rate. It is also one of the largest sectors of the world economÝ.

As per its contribution in the national income and job creation, service
industry is the largest and most dynamic segment of Indian economy.
Different services like banking, finance, real estate, transportation,
communication, social and communal service, etc., are facilitated by
this sector. The products, of service sector are of intangible nature,
which include services such as communication, transportation,
 (Services Marketing)
BBA Sixth Semester focused to
sector are
employees in thisteaching, consultancy,
ehousing, etc. Workers or For example,
Cvelop services and not products.
products of service sector.
the economic
anking, nursing, etc.,are opportunities for the
provides ample amount of the members of the
Service sector well-being of
and improvement of opportunities in service
development numerous investment generated by service
society. Investors have can be
Large employment opportunities capita income of the
Sector increment in the per
sector which may cause sector, Indian economy might not have
service
nation. In the absence of position.
been able to attain the current global
the Indian economy have been health and
in
The most important services largest and most challenging sectors and
education. They are one of the progress. The era of economic
hold a key to the country's overall
service industry, As a
liberalisation has ushered in arapid change in the
transition from agriculture
result, over the years, India is witnessing a economy
based economy to a knowledge-based economy. The knowledge
Creates, disseminates, and uses knowledge to enhance its growth and
development. One of the major functional pillars of this economy is
Information Technology (IT) and IT-enabled services (ITeS) industry.
Another major and upcoming service industry is media and
entertainment. It is basically an intellectual property-driven sector with
small to large players spread throughout the country. It covers film,
music, radio, broadcast, television and live entertainment.
To supplement the achievements and meet the shortfalls in all the sub
sectors of the service industry, travel and tourism sector has to be
developed in a sustainable manner. Being one of the largest industries in
terms of gross revenue and foreign exchange earnings, it
growth and expansion in other economic sectors like stimulates
horticulture, poultry, handicrafts, transportation, construction,agriculture,
etc.
1.1.3.
Services areComponents of Services Economy
the most significant
element of different economic
activities of a society. The
1.1 was formulated by economic model which is shown in figure
Dorothy Riddle while writing about the
significances of service sector
model of economy reflects inthethe development of entire world This
activities among the three vital movement of different economic
manufacturing, extractive sectors of the economy namely:
further divided into five (mining and farming) and services which are
allthese activities. sub-groups. Consumer is the final destination of
 Extractive
sector
Consumer
Business
services

Tráde
Infrastructure services
services

Social/personal
Public services
administration
Manufacturing
sector

Figure 1.1: Interactive Model of Service Sector

The below stated points can be used to have complete knowledge about
the role of service sector in an economy:
Infrastructure Services: Infrastructure services are essential part of
economy. These services include transportation and communication
which helps in connecting all sectors with cach other. They also help
in creating links with the customers. Infrastructure and trade services
act as intermediaries between the manufacturing, mining and
distribution sectors. These services are essential for industrialisation
and in absence of these services society cannot progress. )
2) Business Services: Services relaied to banking, finance,
advertising, consulting and other business functions are involved in
business services. These services are provided by specialised firms
to the manufacturing firms at convenient costs. Manufacturing firms
can avail these services on their own but it may cost them high
prices. Hence, they avail banking, advertising, consulting, etc.
services from firms which are specialised provider of such services)
3) Trade Services: Trade services are composed of activities such as
retailing, repair and maintenance. For the proper functioning of the
society and improving the quality of life, service activities are
unavoidable. For example, the importance of transportation for
moving foods to different locations, banking services for fund
transfers cannot be neglected.
4) Social/Personal Services: Healthcare, restaurants and so on are the
parts of social or personal Services. The household activities have
f moved into the economy, like, lodging, cleaning, child
restaurants and many more. care,
16 17
BBA Sixth Semester (Services
5) Public Administration: It involves various Marketing) Blh.u Introduction to Services (Unit l) of services
services related to the next distinctive characteristic professionals.
well-being of people and societal progression such as Inseparability: It is the by some
related to education, environment, services 2) which is also referred to as immediacy' two types:
defence, law, public transportation,electricity,
town
water supply, health,
planning, social
services is of
Inseparability with reference to services with its consumption and
of
waste management, etc. A stable services, i) Inseparability of production individual who owns the
economic growth are ensured by publicinvestment environment and
administration. i) Inseparability of the service from the
Thus it is quite evident that services are the most ability and executes the service.
simultaneous process
important aspect
any economy rather than just being supporting activities. They are the of Production and consumption of services is a of consumer. This
the presence
important elements for creating a strong economy. Service sector no because services are produced only in as they do not require
characteristic is not exhibited by physical goods
only assists the manufacturing and mining sectors but also supports They are produced, stored and
them in production of outputs. Services play a vital role in creatinga consumers for their production.
global economy. distributed (on the time of requirement) through different channels.
characteristic of
3) Variability/Heterogeneity: Services also enjoy the
1.1.4. Characteristics of Services heterogeneity or variability. Each service is exclusive and one-time
generated, offered and consumed. It can never be exactly done in the
Different types of economic activities which are not directly involved in same manner as the earlier ond. This is because of the reason that the
agriculture, mining or manufacturing/production of goods, are called conditions, locations, point in time, and allocated resources, etc., vary
'services. With the help of using managerial skills, labour for the upcoming delivery, although the customer desires the same
entertainment, advice, training, intermediation, etc., services deliver service which he has availed earlier. Numerous services are considered
human value. They are different from other economic activities. as heterogeneous, i.e., they lack consistency. The heterogeneous
In other words, perfornmance of certain types of acts or activities over services are usually changed according to every consumer and the
individuals or over their physical possessions with the help of people o respective condition. The reasons for this are as follows:
i) The services cannot be separated from the provider, so it
machine or both is known as 'service'. The terms 'product', 'good' and leads
to unevenness. This unevenness automatically arrives in the
'service' are often interchanged by individuals due to confusion. Producd work and depends on the person who is executing the services.
is anything that is being offered by the manufacturer to fulfil the needs o ii) Services greatly involve people, and
the customers/buyers. Product includes any thing which is offered to thc people is certainly variable. The type ofanything which involves
buyer like goods, services, places, experiences, persons, properties, etc. people who
provide the
services often decide the categorisation of the services like
skilled services, unskilled services and
1.1.4.1. Distinctive Characteristics of Services complete specialised
services. But, in contrast, who is producing
The four unique/ distinctive characteristics that differentiate service case of physical products. does not matter in
from goods are mentioned below: ii) Services are affected by the
is being provided, and this time and the place where the service
Distinctive Characteristics of Services
place dimension. effect also varies with the time and
4)
Intangibility 191minmnseparability Perishability:
For example, Services are perishable and they cannot be
for missed bookings hotels and guest houses charge their preserved.
some
Variability/ Heterogeneity siqs Perishabilitye
point of time. In case, customers
because the service value occurred only
at that
the demand of the
bledenoits services is thei perishability does not pose any service is stable,
problem to it, in contrast to the
1) Antangibility: The first unique.characteristic of Smell, hearo situation when demand
intangibility. It is not possible to touch, see, taste, For example banquet halls own muchvaries. For example, marriage
even feel services before they are actually bought. five Starhotel wedding season than duringmore equipment
rest of the year.
and facilities lawns and
during the
person may not experience the joy of living in a
unless and until he stays there.
 19
18 BBASixth Semester (Services Marketing) Bh lotoduction to Services (Unit 1)yi
In fact,
1.1.4.2. Other Characteristics of Services goods do not have thís limitation.
produce it alone. However,customer necessary
to and service provider is
There are some important characteristics of services apart from fo the
the presence of both, i.e., service. In most of the cases, there is a face to
unique characteristics. These are stated below: during the production of during the
Ownership: The marketing of services can be performed in a slight face interaction between the customers and service províders
characterised with
1) services can be
different manner due to ownership. The products are shifted from
on production of service. Therefore, the
consumer.
location to other alongwith the transfer of ownership which facilitate the interaction of service provider and
the reselling of goods by the buyer. This phenomenon is not presen Tabour Intensity: Service uses a lot of manpower. In Tact Lhe
on the skills of
in the case of services. Service provides only an access to the user effectiveness of any service provider largely depends
employees, who have
For example, a customer can utilise the services of a healthcar manpower. The service providers appoint those by the organisation.
gymnasium, play station or hotel but the actual ownership rests wit the expertise in the field of service being offered emnploys lot of
the service providers, and it is not transferred. Automation of services is not possible, thus, it sharing and
some extent of knowledge
manpower. However,
2) Performance: Services are performed, unlike the goods which ar capturing can be done with the help of
knowledge managemnent
manufactured. In most of the circumstances, the services do no systems. On the other hand, most of the
processes of goods
have any physical product. automated to control the demand of manpower.
production can be
3) Simultaneity: There is no method by which services can be
delivered to customers or users. Channels of distribution cannot be 115./mportance of Services
employed for the movement of services. In order to receive the phe imnortance of services can be understood with the help of folowing
benefits of services, it is necessary that both the service providers points: Importance of Services
and service users are present together. Thus, it can be stated that
services can be offered toa limited geographical locations.
Upward Trend in the Disposable Increasing Specialisation
4)/Quality Measurement: Different kinds of parameters are used for Income
the evaluation of quality of the services. Service level cannot be used
for the measurement. Rating or quantifying the buying of service is Changing Lifestyle Increasing Literacy Rate
very difficult. For example, while using the service of any restaurant, Professionalism in Education
the customer can measure the quantity of food but for evaluating the Information Explosion
overall process, the factors such as the behaviour of waiters,
atmosphere in the premise and staff politeness are also necessary. Sophistication in Market
Therefore, the services can be rated on the basis of satisfaction of
customers. Atmosphere. conveniences, consistent quality, status, Tpward Trend in the Disposable Income: Since last ten years, the
in the disposable income.
anxiety, moral, etc., are collectively sold by any service provider. Indian customers are exhibiting upward trend
is resulted due to developmnent of
The transformation of economy
5) Nature of Demand: The various elements related to the nature and opportunities for an individual,
level of demand cannot be avoided while determining the features of corporate sectors. If there are many job masses and as the earnings
to
it will offer higher chances of earning consumption.
services. The nature of services is inconsistent in most of the instances, will result in more Thus, increased
will increase, it
especially in the time of peak season which results in unprecedented developments in the
increase in demand. For example, during the time of some festivals or disposable income is resulted due to the positive in the demand when
prompt increase
development sectors. There iS a income
marriage season, the load on public transportation increases in his irespective of the inflation.
someone has an increment
significantly. During the summner, most of the individuals prefer to go current era is of specialisation where
to hill stations. The use of play grounds is increased in winter. All 2) Increasing Specialisation: The increased specialisation
these examples reflect the flexibility of services as per demand. perfection receives the appropriate focus. The process of economic
results in higher sophistication in the
6) Participation of Customers: Generally, it is essential for the
customer
to be present at the time of production of the service, as it is
not possible
 ((Services Marketing) Bh.}
BBASixth Semester
Introduction to Services (Unit 1)2 z2 KHS 21
20 increased level of technological
transformation. There is aneconomies and itis obviously resulted 1.1.6. Classification of Services
industrial
advancements in the specialisation. For having the COSt. Services can be classified on the basis of following factors:
higher need of organisations are bound to improve on )Ây Market Segment: As the needs and requirements of different
due to the
effectiveness, most of
organisations are approaching specialist for almost markets are not homnogenous, the services are different for different
specialisation. The organisation, the roles of market segments. In Figure 1.2, this classification ís represented:
the management of an
every activity. In management consultants, legal
experts and professionals
like the significant. End Consumer
technocrats are highly
advisers, financialexperts, noticeable chhange in the Coaching, Taxi, Car
Lifestyle: There will be a corporate culture and By Market Segment Wash, Life Insurance
3) Changed to the development of soo
lifestvle due sector. The fashion will be
development of potent service the impact of internet on varione
Business Consumer

converted into an industry due toconsciousness willI be promoted Management Consulting, Machinery Repair,
aspects of life. As the health Accounting Services, Legal Services
beauty parlours, jogging
therefore the services like hair dressing,growth. Figure 1.2: Classification of Services by Market Segment
facing a good
and gym centres would be
The literacy rate especially in the Following types of services are there according to the types of
4) Improved Literacy Rate:improving significantly due to education market served or ultimate customers:
backward areas of India is makes the consumers i) End Consumer Services: The services which are bought by the
mission adopted by government of India. This customers for self-consumption are termed as end consumer
about the services which
more aware, knowledgeable and sensitive services'. For example, hair cutting, beauty care, body
they are consuming. massage, etc.
5) Professionalism in Education: Al the organisations
whether they
services will give the highest priorities i) Business Consumer Services: The various services which are
produce products or offer the bought by the organisations are called business consumer
to the development of human resource. However performance
services' or Business to Business (B2B) services. For example,
orientation will be the root of all the corporate activities and this s consultancy, market survey, advertising, etc.
not accomplished without having an employee orientation in the
organisation. Most of the population will peruse the professional 2) By Degree of Tangibility: The types of services are also influenced
education due to the increased importance to professional excellence. by the degree of tangibility. Figure 1.3 reflects the classification of
6) Information Explosion: Lot of attempts are made towards creating services on the basis of degree of tangibility . Depending upon the
degree of tangibility, the services can be classified as follows:
an information super-highway by the developed countries. Car rental, Vending machines,
information explosion is resulted by a lot of innovations a of Tangibility Highly Tangible
By
Degree Telecomnmunications
inventions in the area of communications. This is the main reason
behind conversion of globe into a global village. The new definitions Service Linked to Domestic appliance repair,
of developments are written in every dimension of the business after
Tangible Goods Car service
the sectors of
development in satellite Almost all the
the economy are influenced bycommunication.
this communication explosioOn. Psychotherapy, Consultancy.
7) Sophistication in Market: The sophistication in the markets is Highly Intangible Legal services
created by the development of yarious communication services Figure 1.3: Classification of Services by Degree of Tangibility
where the expectations of the customers are relatively high. There
will be a drastic change in the food habits, dresses and hair styles, i) Highly Tangible: Services are termed highly tangible' when
drinks, style of homes and etc. The any tangible product offering is included in it. Sometimes, the
apartments,
nature of the market pertaining living conditions,
to the products and services
which lifespan of such products is limited. For example, a person can
are demanded by the
customers will face a drastic change.
 BBASixth Semester (Services Marketing) Bh.U
22
period, after the completion t
Introduction to Services (Unit 1),
take a car on rent for aspecifiedneeds t0 return the car to tha non-profit or profit establishment. Classification of services on the
23
this fime period, the customer basis of busineSs orientation
service provider, or the purpOse of servíce
is described in the figure 1.5. organisations
) Service Connected to Tangible Goods: Some kind of warranty
is provided on the products by the business organisations. If a Non-profit Organisation
customer faces any difficulty with the products, free services are Scouts Association, Charities,
offered to the customer for a limited period of time. Such free By Business Orientation
Public sector leisure facilities
services come under this category. For example, if acustomer
buys a cell phone, the manufacturer provides the free service for Commercíal
a limited time.
i) Highly Intangible: In these types of services, no physical Banks, Airlines, Tour Operators,
Hotel and Catering services
product is offered to the customer. For example, in Yoga centre, Figure 1.5: Classification of Services by Business
the customer does not get any product apart from the Yoga Orientation
exercises. The customers can feel the relaxing environment in the On the basis of the objectives of conducting
can be grouped into following categories: business, the services
centre but apart from this, no physical products are offered.
i) Non-Profit Services: Serving the
3) By Skills of Service Providers: Type of services is greatly society and
profit are the main objectives of such services. not generating
influenced by the skills and abilities of service providers. Figure 1.4 For example,
services of charitable hospitals, government schools, etc.
depicts the classification of services depending upon the skills of ii) Commercial Services: Earning
service providers. maximum profits and revenues
are the main objectives of such services. For
Professional
offered by airlines, banks, insurance advisers, etc. example, services
By Skills of the Medical services, Legal services,
Service Providers Accountancy, Tutoring 5) By Degree of Regulation: The level of
imposed by the government can be the otherregulations which are
basis of classification
Non-Professional of various services. Figure 1.6 shows the
on the basis of amount of classification of services
Babysitting, Caretaking, Casual regulations.
labour, uniformed security, Taxi
Highly Regulated
Figure 1.4: Classification of Services by Skills of the Service Providers
Mass transit, Hospitals,
The different types of services can be grouped into the Insurance, utiliies
categories depending upon the skills and abilities requiredfollowing
by the By Degrees of Regulation Limited Regulated
service provider to provide services to the
i) Professional Services: Formal training iscustomers: Catering, fast food
providing these kinds of services. For example, essential for
offered by doctors, IT consultants, services Non-regulated
ii)
lawyers, etc. Computer time, leisure
Non-Professional Services: No
provide services to the customers. formal training and
is required l0 lawn care, house
Figure 1.6: Classification of Services by Degree ofpainting
arethe typical Housekeeping babysittng Regulation
example of these types of services, where
no need of formal there is Depending on the degree of regulations, various services can be
training for the
service providers. classified as below:
4) By
Business Orientation: The nature of business orientation of a i) Highly Regulated: A large variety of
service organisation also formulated to regulate these services, rules and regulations are
For example, hospitals.,
organisatíon determines the of services offered by
It. Aservice
may be publictype
or private or it may be insurance, mass transportation, etc.
 Bh.t
BBA Sixth Semester (Services Marketing)
services have limited rules
Regulated: Some of the
24
ii) Limited example, fast foods, catering, etc, Introduction to Services (Unit 1) 25
and restrictions.For
Non-Regulsted: In sonme of the services, there are no 4) Information Service Businesses: Information and cultural products
im) regulations. For example, lawn care, house painting, computer are developed and distributed through information service
businesses. These service businesses also provide means for data
tìme, etc. processing as wellas for distributing information products.
Players in Services Sector
5) Leisure and Hospitality Service Businesses: Two sub-sectors, i.e.,
1.1.7. are as follows 'arts, entertainment and recreation sub-sector' and 'accommodation
players/businesses in Indian service sector and food sub-sector', compose to form leisure and hospitality
Key service
Players in Seryices Sector service businesses. Following types of activities are performed
within arts, entertainment and recreation sub-sector:
Education and Health Service Fìnancial Service Businesses
i) Live performances, exhibitions, or events,
Businesses ii) Preservation and exhibition of historical, educational and
cultural places and
Government Service Businesses Information Service Businesses
ii) Developing centres or institutions for leisure, hobby or
amusement.
Leisure and Hospitality Service Professional and Business Services
Businesses 6) Professional and Business Services: This sector is comprised of
'professional, scientific and technical services', 'managemnent of
Transportation and Warehousing waste
support,
Wholesale and Retail Trade various businesses? and 'administration,
and Uilities Service Businesses Businesses management and remediation services'.
Warehousing and Utilities Service
7) Transportation and
Other Services related with
Businesses: Transportation sector involves activities
the transportation of freight, travellers, etc.
passengers,
storage of
Businesses: Schools, colleges, Warehousing sector involves activities related with
1) Education and Health Service the parts of educational service goods. Other activities involved in this sector are related with the
universities and training centres are management of various modes of transportation such as air, water,
nursing care facilities, home
sector. Various health services like, hospitals, etc., are included rail, road, etc.
healthcare services, physician's offices, Businesses: The wholesale and retail
in the healthcare and social
assistancesector. 8) Wholesale and Retail Trade
provided by the wholesalers
main sub-sectors are included in sector is comprised of various services customers && other
2) Financial Service Businesses: Two insurance sub-sector' and 'real and retailers to their business associates,
this service business, i.e., finance and individuals.
The companies involved in
estate, rental and leasing sub-sector. and insurance sub-sector 9) Other Services: The various activities which
do not make apart of
financial transactions constitute the finance included here. These activities may
include insurance carriers, saving the above mentioned sectors are
of the financial services. These services such as laundry and dry-cleaning.
credit unions, etc. be related with the
institutions, security brokers, commercial banking, parking, personal healthcare, beauty care, photographing. pet care,
Government service businesses repair services for machines and other equipment, etc.
3) Government Service Businesses:
government control. It includes
are commposed of enterprises under
enterprises of central, state, and local agencies which are involved
n
1.1.8. Evolutionof Service Sector
welfare programmes. different stages viz., pre
administration and management of public
and policies The service sector has evolved through post-industrial stage. While in the
Functions of these services include developing laws maintain national industrial stage, industrial stage and only to households, the
and settling criminal and legal cases sO as to pre-industrial stage service was restricted
dominance of factories andthe
security. industrial stage was characterised by the
 BRASixth Semester (Services Marketing) Bh It
26 Introduction to Services (Unit 1)
Hence the service sector has started
being
manufacturing processes. After 19" century when najor industries were 1
the post-i-industrial stage encompassing rapid growth in already
recognised in
transportation, utilities, banking. real estate, insurance and higher and when the income of people was established
expected to grow more, their
requirements became more "naterialistic",
educatian. demand for more services in health, education,andandthey began to
evolved are as followe. sectorsS. entertainment
The various stagesthrough which servIce sector has
Pre-ndustrial Stage: Life was characterised as a game against According to BelI, "The transformatíon from an industríal to a
nature. Working with muscle power and tradition, the labour force industrial society occurs in post
had been engaged in agriculture, mining, and fishing. Life was i) There is a natural many ways".
conditioned by the clements, such as the weather, the quality of the transportation developrnent of servíces, such as
and utilities, to support industríal
soil. and the availability of water. The rhythm of life was shaped by As labour-saving devices are developrnent.
nature, and the pace of work varied with the seasons. Productivity process, more workers engage inintroduced into the productíon
had been low and bears little evidence of technology. Social life such as maintenance and repair. non-manufacturíng actívities,
revolves around the extended houschold, and this combination of i) Growth of the population and mass consumption of goods
low productívity and large population results in high rates of increase wholesale and retaíl trade, along with banking, real
underemployment (workers not fully utilised). Many seek positions estate, and insurance.
in serviccs, but of the personal or household variety. Pre-industrial iii) As income increases, the proportion spent on the
necessities of
food and home decreases, and the remainder creates
socicties are agrarian and structured around tradition, routine, and a demand
authority for durables and then for services.
2) Industrial Stage: The period between 18" and 19" century is According to Ernst Engel, a Prussian statístician of the 19
regarded as the industrial revolution era world over. There were century, "As family incomes increase, the percentage spent on food
Tmany inventions, new transportation modes, technological and durables drops while consumption of
brcakthroughs and scientific discoveries that took place during this desire for a more enriched life increases services that reflect a
period especially in European countries. The predominant activity in phenomenon is analogous to the Maslow correspondingly This
says that once the basic requirements hierarchy
of needs, which
an industrial society was the production of goods. The focus of of food and
attention was on making more with less, Energy and machines satisfied, people seck physical goods and, finally,shelter are
personal
multiplied the output per labour-hour and structured the nature of development.
work Work is accomplished in the artificíal environment of the
factory, arnd people tend the machines. The rhythm of life is Table 1.l:Comparison of Socleties
Game Pre. Use of Unit ofStandard Structure
machine paced and dominated by rigid working hours and time Fentures dominant Human Social Lie of Living Technology
ciocks. The standard of living becomes measured by the Activity Labour Measure
gods, but note that the complexíty of coordinating the quantity of
production
Soclety
Pre- Against Agriculture Raw Bxtended Sub
and distribution of goods results in the creation of large Industral nature Mining muscle Routine Simple hand
houschold stence Traditional tools
and hierarchic organisations, These organisations are burcaucratie power
Authoritative
erlain roles for their members, and their opcrationdesigned tends
with
to bc
ndustrlal |Agalnst Clooda Machine
fabricate production (ending
Individual Quantity Bureaueratic Machines
of gooda Hierarchical
impersonal, withperons treated as things. Post
dnature
|Amony Services Artisie
3) Post-Industrial Society: While an Industrlal pernons CommunityQuality olnte nfomation
standard of living by the quantity industrial society defines the Creative |ife injdependent
|ntellectual ofOlobal
of goods, the post-industrial
Mciety concerned with thec quality of life, A8 measured
is health,
such as health, by services education,
cducaion, and reCIeation,
professional person, because rather than The central figure is the recreation

information is the key esegy or physical srength,

resource.
 BBA Sixth Semester (Services
28°r
Marketing) Bh.u
condiion for entry into a post-industna
ntroduction to Services(Unit 1)
education becomes che
29
Higher professional and technical skills of 11.9 per cent CAGR during 2005-06 to 2014-15 from 21.6 per cent
requires its
society, which claims for more services and social justice lead toCAGR
population. Also, during 1994-95 to 2004-05. As a result of pick up in some
growth in govemment. Concems for environmental protection require sectors such as transportation and business services, services exports
govemment intevention and illustrate the interdependent and even grew by 5.7 per cent in 2016-17. In 2016-17, software services
problems. Table 1.1 summarises the exports, which account for 45.2 per cent of total services, declined
global character of post-industrial
the pre-industrial, industrial, and post by 0.7 per cent due to a challenging global business environment
features that characterise
development. and pricing pressure on traditional services.
industrialstages of economic 200.0

1.1.9. Growth of Service Sector 150.0

observing th.
Growth in service sector in India can be understood by 100.0
following points: 50.0
) India's Services Sector Gross Value Added (GVA): Indi.
achieved Compound Annual Growth Rate (CAGR) of 13.20 e 0.0 H
cent between 2011-12 and 2016-17 in services share to GVA In
terms of overall GDP India ranks 5" in 2017 and in terms of and
services GVA India ranked 13 respectively as of 2015. Services
sector GVA as a percentage of total GVA reached 53.8 in FY17, An
acoeleration in the growth rate of Public Administration and other IService Exports 0Service Imports
services (I1.3 per cent in FY17 from 6.9 per cent in FY16)
supported the incease in FY17, which was in turn supported by the Figure 1.8: Trade Performance of India's Major Services in 2016-17 (U.S.S billion)
implementation of the recommendations of the 7" Paycommission. 3) FDI Equity Inflows: The share of the services sector is 60.7 per
cent of the FDI equity inflows during 2016-17. In the periods 2014
55 -12% 15 and 2015-16, growth of the FDI equity inflows for the top 15
54 53.8 services were 67.3 and 64.3 per cent. In 2016-17, growth rate of
52.9|
10% -10% FDI inflows reduced to 8.7 per cent (U.S. $43.5 billion) due to
53--g% negative growth in trading, computer hardware and software,
8% 51.8| F8% cOnstruction and hotels and tourism. The Goverament has brought
52 8% - I about a number of reforms such as the abolition of the Foreign
50.9| 6% Investment Promotion Board (FIPB) and the introduction of
51 50.0| composite caps in the FDI policy which permits 100 per cent FDI
|50 4% under automatic route for any financial sector activity.
10,000
49 2%
FYI4 .FYI5 FY16 gFYI7 8,000
6,000 -5,564.
48r 0% 4,000 3,652 2338 -
2,000 916
1517_4 26r-35
Growth of India's Services Sector (GVA at basic price)
GVA (%)
Figure 1.7: India's Services Sector GVA (at Basic
Price and % of "Total)
2) Trade
financial Performance
of India's Major Services: Till the global
crisis of 2008. India's
good growth for almost a decade.services expo was
Services export grow reglSterm
reduceat
Figure 1.9: FDI Equity Inflows to the Services Sector in 2016-17 (U.S.S million)
 BBA Sixth Semester (Services Marketing) Bh.u Introduction to Services (Unít 1) 31
Service Sector in Indio
sector in India are as 4) Increased Population of DINKSDouble income group with no
30 of
for Growth
Factors Responsiblefor the growth of services kids is called DINKS. There no physical problem associated with
responsible
Factors the couples for not having children. Because of their busy schedule
follows: Factors Responsible for Growth of Service
Sector in India and careers, they do not attempt to have children) In the first few
years of marriage, they avoid having any child. Later, due to high
Increase in Wealth More Spare Time
pressure of their jobs and the pressure which is being exerted due to
their promotion and transfers, they ultimately decide of not having
any child. DINKS also tend to spend lavishly on services.
Working Woman Increased Population of DINKS
5) Increased Life Expectancyt A better life expectancy is resulted due to
Increased LifeExpectancy More Complex Products better economic prosperity and improved livíng standards which have
eventually led to increased number of elderly people. Due to this, there
Complex Lifestyles Increased Anxiety for Limited is an increased demand for healthcare services and nursing homes.
Resources and Ecology 6) More Complex Products: A large variety of new products are
More and More Products offered to the customers due to increased technological
Technology Innovation
advancement. In comparison to past generationsthere is a very
Cultural Changes Increased Awareness of Healthcare
complex and greater requirement of different types of services from
people in day-to-day life. There is a need of experts for the
maintenance of computer, washing machine, fridge, laptop, etc.
Economic Liberalisation Thus, there is an increased demand of these types of service
7) Complex Lifestyles: A number of roles are being played by the
1) Increase in Wealth: The wealth of citizens of developed countries members of the society. In order to reduce or share their burden.,
and many developing countries has increased largely over the years. there is an increased demand of various services The services of
Many multinational companies are attracted towards India due to a legal consultants, labour supply services, employment services,
strong 250 million middle income group which demands different income tax consultants, baby care centres, etc., are some examples?
products and services. (The increase in the wealth of Indians has 8) Increased Anxiety for Limited Resources and Ecology:Financial
given a rise in demand of services suçh as travel, tourism, resources are scarce or limited for most of the individuals but there
entertainment, personal services, clubs, etc. is always a need of utilising various service_) There will be a
2) More Spare Time: The tendency of having more spare time 1s reqirement of financial strength for having afangible product for
different types of services. Similarly, these products may not be
increasing around the globe so that people can have enough time to used fully by the individuals. Thus, (there will be an increased
spend with their families or do their personal work. Even in semi demand for the services such as door-to-door service, car rentals,
urban or ruralparts of India, people are qhanging the way they used
to look at the holidays or leisure time. A lot of time and effort 1S accommodation, computer hardware rental, et The focus of many
economies has shifted towards maintaining environment and
being spent by individuals on education,training, skill development ecological balance.
for themselves. They are also spending time on
personal care, children, touring, and so on. entertainmen 9) More and More Products: In past years´a large variety of choices
of different products has been offered to the customers. Due to rapid
3) Working Woman: Most of the
economies
the number of working Women, Gone. are the are seeing an increase development of new and innovative products, the life of existing
days when womnen products is reduced significantly) The produet's functionality is not
used to be considered as merely
housewives or inferior to men. 1no fully considered by the consumefs before buying it due to their busy
Capability of women is proven equal to and in some areas even moe schedules. Therefore, there is, an increased demand of various
Competent than men.(There is a requirement of those services whicn consultancy services.
can reduce their burden of house as
well as office activities.)
32 BBA Sixth Semester (Services Marketing) Rl
10) Technology Innovation:(The implementation of advanced tools an Introduction to Services (Unit 1) 33

methods commonly known as technology. There is a continuo 2) Creates Employment Opportunities: Service sector provides
is
attempt from the innovative service providers to look for the ample of employment opportunities to the people for earníng their
methods of reducing the processing time, automating thediffero servi livelihood. The numerous job opportunities in thís sector have
providing, reducing the cost (and thus prices), having close connectio resulted due to different services such as entertainment, tourism,
with the customes, developing new servies, creating BPO,hospitality, softWare, aviation and so on.
existing products, enabling fast delivery of services) appeal for th
etc. 3) Contribution to National Income: The contribution of service sector in
11) Cultural Changes: Different types of knowledge taboos, behavio the national income has increased quite significantly in the recent time.
values, and traditions which are passed from one generation The fastest growing sector of Indian economy is service sector which ís
another are known as culture There is a very strong impact likely to continue holding its position for a longer period of time.
culture on the life style of individuals. As culture is a process4) Provision for Basic Services: Service sector provides sorne of the basic
development, it is dynamic in nature. Change is the inevitable,part o services related to health, education, public transport, defence, courts,
culture. Different societies have different pace of changing Som police stations, banking and insurance facilities, telecommunicatíon, etc.
cultures changefast. some moderately, and some very slowly. The These services form an important part of the economic welfare.
iseffects
no uniformity
of these
in the changes which occur in Indian culture. T 5) Supports Comforts and Leisure: Comforts and leisure of citizens
changes are felt more in last century. of a society are supported by many services such as tourism, travei,
12) Increased Awareness of Healthcare: (There is a significan hotels, entertainnent, etc. In India, there is an upward trend of
improvement in the healthcare services in India. The awareness of eating in restaurant, travelling to hill stations and so on.
common citizens towards healthcare is resulted in the form g 6) Improvement in India's Image: Image of India at globai level has
higher life expectancy. The increased demand of healthcare services
is quite evident from the growth of been improved significantlywith the help of various services like.
health centres, medical counselling, diagnosticpsychological counselling, software development, Business Process OutSourcing (BPO).
centres, Information Technology Enabled Services (1TES), etc.
and health-related information sites. In order to spreadfitness clubs
awareness 7) Increase in Exports: Indias export figures have
among rural population and illiterate individuals, different improved
campaigns have been started by government types of significantiy due to better performahce of service sector.
and mnany other social
Organisations. Many campaigns such as immunisation. childcare 1.1.11. mnportance of Services to Other Industries
preventve medicines, and family planning have been initiated to The importance of services to other industries is as follows:
promote healthcare awareness in rural parts of
13) Economic India. I) Time Savings: Supplying services to every industry provides for
Liberalisation:A
Indian business scenario by the lot of significant changes were
induced in
faster acceptance of orders, instant ordering processes and saving of
time, energy and money.
initiated in 1991 Indian economic liberalisation which ws
market was opened for MNCsJThe 2) Helpful in Attracting Buyers: Supplying services to different
monopolies were finished in many service
and privatisation areas due to
state-owned industries is highly beneficial for the supplier as it can attract more
ventures policies.
/n different Entrepreneurs were encourageddisinvestmens
to start the
buyers. Sales would basically be increased.
fields due to
eradication of licensing 3) Increased Sales: Supplying services to different industries
1.1.16. Importance of Service
introduces the seller to a wider marketplace, suppliers have the
Following
1) Supports points highlight the importance Sector
of service
potentiality to increase revenue and thereby increase sales.
4) Reduced Selling Costs: By automating sales and client backing
Primary and
primary and secondary Secondary Sector: For the sector processes companies can cut over sellingcosts by around 25-30%.
crucial. Various types of sector, the role of service rapid growtn o
is very 5) Building Long-Term Relationships: Suppliers typically spend more
services sector
transportation,
secondary sectorstrade, insurance,by etc.,
are fulfilled
such as
required by storage,
banking
the primary a
time, money, and effort to build relationships with their target market.
This contributes to building more stable and long-term relationship.
the
 Marketing) Bh
34
BBA Sixth Semester (Services Services (Unit 1)
Working with fellow marketers dh Introduction to 35

6) Collective Knowledge: Delivery Time IWhen the goods are ordered/The time of
amazing learning experience for th |7) ehough phone, website orservices should delivery of the
business owners can be an be helpful i be as per the
so gained can lemail, the delivery time has to will of the customer; though the
supplier. The collective knowledge
products. bi |be decided as
per the|delivery time
creating innovative and useful preference of the custornen On major difficultymaystandíng
vary. The
in
1.1.12. Differences between Goods and Services |buying the, goods from
store,
aretailfront
the
of the marketing
custorners can executives is to convince the
goods and services and it can ba Ipurchase the goods, and can customers that the quality
There is a lot of difference between significant features
seen through the difference between their various and demonstrated
walk out with the desired services would be delivered
be touched items. within the specified time
Goods refer to tangible items which can period.
they are fascinating and can be traded or exchanged. Thus, goods are Desires and Several time goods afe It is not possible to
material, can be taken away and can be stored, for example, food 8) Requirements purchased in a rage of impulse. services in an purchase the
impulsíve
books, fumiture, household appliances, industrial objects, etc. For example, a fascinating manner. Prior planning and
dress can allure ladies to buy it thoughtful analysis Occurs
Conversely, services refer to intangible experiences such as, hotel and irespective of whether they before purchasing the services
hospitality, legal and medical advice, banking and insurance, health and need it or not. For example, house cleaning
fitness, transport and communication, etc. It is important to note here service provider can do
that these services cannot be stored anywhere and additional personne| |marketing of the services by
are required to offer such services. These services render feeling of offering options like, delivery
time as per your convenience'
happiness, relaxation, fulfilment, aid, etc. 9) Associations The marketing of the goods is(The trading of services comes
Point of Difference Goods Services less dependent on establishing out of establishing relationship
1) Perishability The goods can be stored for a It is not possible to store these |the relationship with the with the clients.
long time and most of these services. They occur only when çustomers.
|are non-perishable. availed. |10)_ Exchange |It is possible to exchange thé It is not possible to exchange
2) Inseparability As the goods are firstly It is difficult to separate these purchased goods. the services.
|manufactured, then supplied, services from the provider. Alot 11y Elements Marketing of goods need 4 P'|Marketing a service require 3
of marketing mix, those are:more P's to the conventional "4
sold and used; their identity is of variation can be seen in these Product, Place, Price, and P's": Physiçal evidence, People
distinct from the producer. |services in terms of quality.
delivery time, results, etc. Promotion. and Process.
3)/ Inconsistency The inconsistency in the qualfty There i_ alot of variation in the
|of the goods comes on part offservice. The variation in 1.2. EXERCISE
|the manufacture?. It is thelquality comeskon the basis of
manufacturer,(who can ensure the service provider, time and
consistency of the quality, for place of delivery) 1.2.1. Multiple Choice Questions
any sort of divergence from the
standard form, the 1) What is the 4" unique characteristic of service markets?
manufacturer is to be blamed. i) Intangibility
4) Tangibility Purchasing of goods is ii) Inseparability
Purchasing
acquiring a material item. For\acquiring
service is
ii) Heterogeneity
intangible
example, buying a music| experience. For example, iv)
System, or a mobile phone.
5) Reliable The quality of goods is more|beauty services by a saloon.
Reliability and dependence play|
a) Homogeneity b) Protractability
c) Perishability d) Serviceability
Important than dependence or|significant roles in services.
reliability of the dealer)
6 Time |Time has to be spent 2) Which of the following is not one of the five characteristics of services?
Antensiveness manufacturing the only oServices are
goodsractivities. It is time-consumipE
|Once the goods are producéd, not possible 1o a) Tangibility b) Inseparability
it can be marketed provide the services withou" c) Heterogeneity d) Lack of ownership
without spending morerepeatedly
time,
investing time.)