Key Characteristics of Services

1. Intangibility: The intangibility makes services unable to be

touched or seen.
2. Inseparability: The inseparability of services reflects the
interconnection among the service provider, the customer
involved in receiving the service, and other customers
sharing the service experience.
3. Heterogeneity: The heterogeneity nature of services reflects
the variation in consistency from one service transaction to
the next.
4. Perish ability: A distinguishing feature of services is that
they cannot be saved, their unused capacity cannot be
reserved, and they cannot be inventoried.
 Fundamental Difference between
Goods & Services
Difference I/Intangible
Goods Services
Tangible Intangible
The most basic and universally cited difference between
goods and services is intangibility.
Service are performance or actions rather than objects,
they cannot be seen, felt, tested or touched in the
same manner that we can sense tangible goods.
Example – A Surgeon, A Dentist, A Barber (They just
perform services).
Marketing problems caused by Intangibility
1. Lack of ability to be stored: Due to their
intangibility services cannot be inventoried. As a
result, the unused portion of services cannot be
stored. For example, Bus seats that are not sold for
the morning shift cannot be added to the night
shift.
2. Lack of protection by patents: Because of the
property of intangibility, service are not
patentable. Human labor and effort are not
protected. The tangible machinery involved in the
process is protected, not the process itself. Lack of
patent protection is that new or existing services
may be easily copied.
Marketing problems caused by
Intangibility
3. Service cannot be readily displayed or
communicated: The promotion of services is a
challenge for its marketers.
For example: Insurance policy

4. Difficulty in pricing: In case of pricing the goods, a

cost-plus pricing approach is considered. However,
the challenge involved in the pricing of services is
that there is no cost of goods sold. The primary cost
of producing a service is labor.
Possible solutions to Intangibility problems
1. The use of tangible clues: The absence of tangible properties,
services are evaluated differently from goods. Consumers usually
look at the physical evidence or tangible clue in service. Tangible
clues may include such evidence as the quality of furniture in a
lawyer's office, the quality of decoration in a bank office, etc.
Advertising of tangible clues may solve the intangibility
problem.
2. The use of personal sources of information: A customer
usually evaluate services based on the subjective
evaluations relayed by friends, family, and a variety of
their opinion leaders. This process consists “word-of-
mouth advertising”. Example: When one seeks for a
family doctor, ask information from any friend or relative.
So stimulate the present customer to recommend family &
friends.
Possible solutions to Intangibility problems
3. Creation of strong organizational image: As
services are intangible, the perceived risk
associated with service purchases is generally
greater than their goods counterparts.
Service firm can spend a great deal of effort,
money and time in developing a nationally known
organizational image.
Difference II/Inseparability
Goods Services
Separability Inseparability

A distinguishing characteristics of services

that reflects the interconnection among the
service provider, the customer involved in
receiving the service and other customer
sharing the service experience.
Marketing problems caused by Inseparability
1. Physical connection of the service provider to the
service: The service provider must be physically present
to deliver the service. Because of the intangibility of
services, the service provider becomes a tangible clue on
which at least part of the customer’s evaluated of the
service experience becomes based. As tangible clues,
service providers are particularly evaluated based on
their use of language, clothing, personal hygiene, and
interpersonal communication skills. For the production
of many services to occur, the service provider must be
physically present to deliver the service.
Example: Dental service requires physician.
: Medical surgery requires sergeant
Marketing problems caused by Inseparability
2. Involvement of customer in production process:
Services are produced and sold simultaneously. In
fact, services are sold first then produced . Therefore,
customers involvement in production process is
essential which describes the inseparability nature of
services. The customer’s involvement in the production
process creates uncertainties-
i) Scheduling of production
ii) The length of service delivery process sometimes
depends on customers desires.
iii) Cycle demand
Example: McDonald's breakfast lunch dinner.
Marketing problems caused by Inseparability
3. Involvement of other customer in the production
process: The presence of other customers during the
service encounter is the third defining characteristic of
inseparability. Because production and consumption
occurs simultaneously. Several customers often share a
common service experience. This shared experience can
be negative or positive (It usually creates negative impact
on service production see services in action).
4. Special challenges in Mass production of services: One
vital obstacle presented by inseparability is how to
successfully mass produce services. Example: A physician
can do treatment a patient (once at a time).
Secondly, customers interested in particular provider’s
service would have to travel to the provider’s location
(wherever (s)he is serving creates inseparability problem).
 Possible solutions to inseparability problems
i) Emphasis on selecting & training public contact personnel: Hire
employees who are properly equipped to handle customers
and their needs. Unhappy
employees can affect both customers & other employees.
Bright highly motivated employee can create more
pleasant service experience.
ii) Consumer management:
Service personnel can implement the strategy as
separating smokers from non-smokers, Family – Non
family etc. in a restaurant.
iii) Use of multi-site locations:
Select multiple locations to limit the distance that customers
have to travel and staffing each location differently to serve a
local market.