1.

UNDERSTANDING SERVICES

A. Service Product Difference/ Service

Peculiarities
(i) 4 I’s of Services
a) Intangibility - intangibility spectrum
b) Inconsistency - heterogeneity
c) Inseparability - simultaneous production& consumption
d) Inventory - perish ability

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Characteristics of Services
Compared to Goods

Intangibility Heterogeneity

Simultaneous
Production
and Perishability
Consumption

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 Examples of Service Industries
• Health Care
– hospital, medical practice, dentistry, eye care
• Professional Services
– accounting, legal, architectural
• Financial Services
– banking, investment advising, insurance
• Hospitality
– restaurant, hotel/motel, bed & breakfast
– ski resort, rafting
• Travel
– airline, travel agency, theme park
• Others
– hair styling, pest control, plumbing, lawn maintenance, counseling
services, health club, interior design
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 1. UNDERSTANDING SERVICES
Service industries & companies- whose core product is
a service
e.g. lodging – Taj Hotels, transportation- Indian Airlines
Service as products – wide range of intangible product
offerings
e.g. IBM software consultancy, Accenture
Customer Service- in support of the co’s core product
call centers
Derived Service – service provided by the goods
e.g. car provides transport service

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 Implications of Intangibility
• Services cannot be inventoried

• Services cannot be readily displayed or

communicated

• Services cannot be easily patented

• Pricing is difficult

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 Implications of Simultaneous
Production and Consumption
• Customers participate in and affect the
transaction

• Customers affect each other

• Employees affect the service outcome

• Decentralization may be essential

• Mass production is difficult

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 Implications of Heterogeneity
• Service delivery and customer satisfaction
depend on employee and customer actions

• Service quality depends on many

uncontrollable factors

• There is no sure knowledge that the service

delivered matches what was planned and
promoted
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 Implications of Perish ability
• It is difficult to synchronize supply and
demand with services

• Services cannot be returned or resold

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1.UNDERSTANDING SERVICES (Contd.)
B. Services Marketing Triangle
a. Company
b. Provider
c. Customer
Between a & b - Internal Marketing
Between b & c - Interactive Marketing
Between a & c - External Marketing

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 SERVICES CLASSIFICATION

(1) People Processing Services

These services require the customer’s presence
while the service is being provided. Typically such
services are directed or applied to people and so
their presence is mandatory. To use, enjoy and
buy these services customers must be prepared
to spend time co-operating with the service
operation. Typical examples are medical services,
passenger transport, hotels, fitness centres and
beauticians. It is the marketing of these services
that is very different to marketing physical
products.

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 SERVICES CLASSIFICATION
(2) Possession Processing
Such services are aimed at peoples’
possessions, e.g. goods transportation,
laundry and repair services. Clearly these
services do not require customer involvement
in the process and so from a marketing
perspective are less complex than people
processing services.

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 SERVICES CLASSIFICATION
• (3) Mental Stimulus / Information Based Services
• Under this heading are a developing range of
services aimed at people’s minds and assets, e.g.
entertainment, education. The internet has created
huge global opportunities for mental stimulus and
information processing services. e.g. consulting,
education, entertainment, finance, travel facilitation,
data processing and communication which can now
be delivered electronically to global markets

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 Tangibility Spectrum
Salt
 Soft Drinks
 Detergents
 Automobiles
 CosmeticsFast-food
 Outlets
 Intangible
Dominant

Tangible

Dominant Fast-food
Outlets 
Advertising
Agencies

Airlines 
Investment
Management 
Consulting 
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 Consumer Evaluation
Processes for Services
• Search Qualities
– attributes a consumer can determine prior to purchase of a
product

• Experience Qualities
– attributes a consumer can determine after purchase (or
during consumption) of a product

• Credence Qualities
– characteristics that may be impossible to evaluate even after
purchase and consumption
1.UNDERSTANDING SERVICES (Contd.)
C. Search, Experience & Credence
Attributes of Services

Manufactured Goods – High on Search Attributes

Services – High on Experience & Credence
Attributes
 Continuum of Evaluation for
Different Types of Products

Most Most
Goods Services

Easy to evaluate Difficult to evaluate

Clothing

Jewelry

Furniture

Houses

Automobiles

Restaurant meals

Vacations

Haircuts

Child care

Television repair

Legal services

Root canals

Auto repair

Medical diagnosis
High in search High in experience High in credence
qualities qualities qualities
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 1.UNDERSTANDING SERVICES (Contd.)
D. Services Marketing Mix
Product Price
Promotion Place
People – Customers, Employees

Physical Evidence – Facility Design, Equipments &

Others
Processes – Flow, Number of steps & Customer
involvement
SERVICES MARKETING MIX-THE THREE
NEW P’s
(1) People
All the human actors, customers and staff who participate in
the servuction system and influence each customers
perception of and satisfaction with the service. Because of the
inseparability issue, front of house staff must interact
continuously with their customers. To satisfy these customers
staff must process appropriate technical and interpersonal
skills. It is often challenging to recruit staff with one of these
sets of skills, and it may often be a considerable challenge to
find staff comfortable and competent in both areas. These staff
are referred to as boundary spanners, or part-time marketers,
as they have both operations and marketing responsibilities.
Apart from a range of human resource management issues,
who manages these staff, operations, marketing or both?
SERVICES MARKETING MIX-THE THREE
NEW P’s
(2) Process
The steps, procedures, mechanisms, and all activities
by which the service is delivered. It is the heart of the
delivery and operating systems.
(3) Physical Evidence
Now referred to as the servicescape, it’s the
environment in which the service is performed,
where all customers, staff and company interactivity
occurs.
 3. UNDERSTANDING THE SERVICES
CUSTOMER
A. Customer Choice

. Need Recognition – Maslows Hierarchy

. Information Search – Small Consideration Set

. Evaluation of Alternatives – Perceived Risk, Self provision of

service

. Decision
 3. UNDERSTANDING THE SERVICES
CUSTOMER (Contd.)
B. Customer Experience
Based on –
the provider

the customer himself

the third party

the physical evidence

 3. UNDERSTANDING THE SERVICES
CUSTOMER (Contd.)
C. Post experience evaluation

Important for predicting subsequent consumer behavior –

seldom used
Word of mouth becomes important-
Good experience creates good WOM
Dissatisfaction leads to poor WOM- Service recovery strategy needed
Attribution of Dissatisfaction
Positive & Negative Biases
 Goods versus Services

Source: A. Parasuraman, V.A. Zeithaml, and L. L. Berry, “A Conceptual Model of Service Quality and Its Implications for Future Research,” Journal of Marketing 49
(Fall 1985), pp. 41–50.
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