Understanding Services

Objectives of the Session

To understand Factors influencing the growth of service sector Definition of service Tangibility spectrum Characteristics of services Generic differences between goods & services Classification of services Developing frameworks for analyzing services Myths about services
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Factors Influencing the Growth of Service Sector

Demographic Changes
Social changes Economic changes Technological changes Political changes and legal changes

Policy changes
Eg- Customer Care Service in Bank & Tele-communication
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Definition of Service
Service is an activity that has an element
of intangibility associated with it and which involves the service providers

interaction either with customers or with

the property belonging to the customer. - Adrian Payne
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Tangibility Spectrum
Services can be classified on the basis of tangibility like following
A pure tangible good A tangible good with accompanying services A major service accompanying minor goods and services A pure service

Characteristics of Services
Intangibility (hair style)
Heterogeneity (Quality varies over time) Inseparability (Cannot separate service from service provider)

Perishability (Food items)

Generic Differences Between Goods & Services

Nature of the product
Problems in quality control Involvement of the customer in production and delivery Absence of inventory Structure channels and nature of distribution

Generic Differences Between Goods & Services

Importance of prompt services
Difficulty in evaluating service quality

Classification of Services
Based on degree of customer involvement:
People processing : Institutes or education center Possession processing: Bike service center etc.

Mental stimulus processing: Advertising agency, consultancy

Information Processing: Data processing, Lawyers/legal
consultants etc.

Classification Based on Service Tangibility

Highly tangible: Bicycle on rent Service linked to tangible products: Free after sales services of
Bikes

Tangible goods linked to services: Facilities in Rajdhani Express

(Train)

Highly intangible: Hair saloon etc.

Classification based on service Skills and expertise required:

Professional services: Doctors, lawyers Non-professional services: Baby sitting, housekeeping etc.
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Classification Based on Business Orientation of Service Provider

Not-for-profit organization Commercial organizations

Classification based on type of end user

Customer services Business to business services Industrial services

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Development Frameworks for Analyzing Services

Type of service Nature of relationship shared by the customer with service organization Service delivery Type of demand and supply of services Extent to which service provider need to customize services

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Myths About Services

Services is a necessary evil for manufacturing firms Service sector is labor-intensive and less productive Service firms earn less revenue when compared to other two sectors Growth in service economy is linked to growth of the public sector services Marketing a service is not different from marketing a product Growth in service sector eliminates jobs from the manufacturing

Examples
GE, Motorola

Wal-Mart ICICI Prudential, HDFC, TATA-AIG

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Summary
Factors influencing the growth of service sector Definition of service Tangibility spectrum Characteristics of services Intangibility Heterogeneity Inseparability Perishability

Generic differences between goods & services Classification of services Based on degree of customer involvement Classification based on service tangibility Classification based on service Skills and expertise required Classification based on business orientation of service provider Classification based on type of end user Developing frameworks for analyzing services Myths about services
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Thank you
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