Nature and Characteristics of a Service

service

Any activity or benefit that one party van offer to another which is essentiallyintangible and does not result in the ownership of anything.

Defining Services

A service is any activity or benefit that one party can offer to another which is essentially intangible and does not result in the ownership of anything. Activities such as renting a hotel room, depositing money in a bank, travelling on an aeroplane, visiting a doctor, getting a haircut, having a car repaired, watching a professional sport, seeing a movie, having clothes cleaned at a dry cleaner and getting advice from a solicitor all involve buying a service. Note, however, that many manufacturers also supply a range of services alongside their products, such as distribution and delivery, equipment repair and maintenance, training programmes, technical consultation and advice. Furthermore, many service providers also supply physical products along with their basic service. For example, airlines offer food, drinks and newspapers as part of their transportation services. As such, there is rarely such a thing as a pure service or pure good, in trying to distinguish between goods and services, it may be more appropriate to consider the notion of a goods-sendee continuum, with offerings ranging from tangible-dominant to intangible-dominant (see Figure 15.1).

Firms can create a differential advantage by moving along the continuum, seeking to alter the balance of tangible and intangible elements associated with their offering. For example, a manufacturer of kitchen units can enhance its offer by supplying a professional design and advisory service for customers.

Types of Service

There are many types of service organization. We can distinguish them in a number of ways. One distinction is the nature of ownership - that is, whether they are private (e.g. warehousing and distribution firms, banks) or public (e.g. police, state-run hospitals) sector organizations. Another is the type of market -consumer (e.g. household insurance policy provider, retailer) or industrial (e,g,

Nature And Characteristics Service

computer bureaux). Services can also involve high customer contact, where the service is directed at people, as in the case of hairdressing and healthcare. Or there is low customer contact, as in dry cleaning and automated car-washes, where the services arc directed at objects. Services can be people-based (e.g. consultancies, education) or equipment-bound (e.g. vending machines, bank cash dispensers). People-based services can be further distinguished according to whether they rely on highly professional staff, such as legal advisers and medical practitioners, or unskilled labour, such as porters and caretakers. The wide variety of service offerings means that service providers must address the problems specific to their particular service when seeking to create and maintain a competitive advantage. Despite this heterogeneity across sectors, there are a number of characteristics that are unique to services.

Service Characteristics

A company must consider five main marketing programmes: intangibility, and lack of oraners/iip. We will look following sections.3

service characteristics when designing inseparability, variability, perishability at each of these characteristics in the

• Intangibility

Service intangibility means that sendees cannot be readily displayed, so they cannot be seen, tasted, felt, heard or sine lied before they are bought. A buyer can examine in detail before purchase the colour, features and performance of an audio hi-fi system that he or she wishes to buy. In contrast, a person getting a hair-cut cannot see the result before purchase, just as an airline passenger has nothing but a ticket and the promise of safe delivery to a chosen destination.

Because service offerings lack tangible characteristics that the buyer can evaluate before purchase, uncertainty is increased. To reduce uncertainty, buyers look for 'signals' of service quality. They draw conclusions about quality from the service intangibility

A major chtw-aeteristic of services - they cannot he .seen, tasted, felt, heard or smelted before they are bought.

Goid's tangibilizes its service by advertising the Gym's equipment line.

place, people, equipment, communication material and price that they can see. Therefore, the service provider's task is to make the service tangible in one or more ways. Whereas product marketers try to add intangibles {e.g. fast delivery, extended warranty, after-sales service) to their tangible offers, service marketers try to add tangible cues suggesting high quality to their intangible offers.4

Consider a bank that wants to convey the idea that its service is quick and efficient. It must make this positioning strategy tangible in every aspect of customer contact. The bank's physical setting must suggest quick and efficient service: its exterior and interior should have clean lines; internal traffic flow should be planned carefully; and waiting lines should seem short. The hank's staff should be busy and properly dressed. The equipment - computers, copying machines, desks - should look modern. The bank's ads and other communications should suggest efficiency, with clean and simple designs and carefully chosen words and photos that communicate the bank's positioning. Tlie bank should choose a name and symbol for its service that suggest speed and efficiency, Because service intangibility increases purchase risk, buyers tend to be more influenced by word of mouth, which gives credibility to the service, than by advertising messages paid for by the service provider. As such, the service marketer (the bank in this case) should stimulate word-of-mouth comnnmicalion by targeting opinion leaders who could be motivated to try its services, and satisfied customers who could be encouraged to recommend its serviee(s) to peers and friends. Its pricing for various services should be kept simple and clear. Similarly, in the case of Lufthansa and other airlines, marketing managers must identify ways to 'make tangible' their service, such as highly efficient ground staff and provision of excellent in-flight comforts.

• Inseparability

Physical goods are produced, then stored, later sold and still later consumed. In contrast, services are first sold, then produced and consumed at the same time and in the same place. Service inseparability means that services cannot he separated from their providers, whether the providers are people or machines. If; a person provides the service, then the person is a part of the service. A rock concert is an example. The pop group or hand is the service. It cannot deliver die service without consumers (the audience) being present. A teacher cannot deliver a service if there arc no students attending class. Because the customer is also present as the service is produced, provider-customer interaction is a special feature of services marketing. Roth the provider and the client affect the service outcome. How a legal adviser relates to his client, for example, influences the client's judgement of the overall service delivered. The extent to which a teacher is able to develop a rapport with her students will influence the quality of their learning experience. Thus, it is important for service staff to be trained to interact well with clients.

A second feature of the inseparability of services is that other customers are also present or involved. The concert audience, students in the class, other passengers in a train, customers in a restaurant, all are present while an individual consumer is consuming the service. Their behaviour can determine the satisfaction that the service delivers to the individual customers. For example, an unruly crowd in the restaurant would spoil the atmosphere for other customers dining there and reduce satisfaction. The implication for management would be to ensure at all times that customers involved in the service do not interfere with each other's satisfaction.

Because of the simultaneity of service production and consumption, service providers face particular difficulty when demand rises. A goods manufacturer can make more, or mass produce and stock up in anticipation of growth in demand. This is not possible for service operators like restaurants or a law firm. Service organizations have therefore to pay careful attention to managing growth, given the constraints. A high price is used to ration the limited supply of the preferred provider's service. Several other strategies exist for handling the problem of demand growth. First, the service provider can learn to work with larger groups, so that more customers are serviced simultaneously. For example, bigger sites or premises are used by retailers to accommodate larger numbers of customers, and a pop concert will eater for a larger audience if held in an open-air sports arena than in an enclosed concert hall. Second, the service provider can learn to work faster- Productivity can be improved by training staff to do tasks and utilize time more efficiently. Finally, a service organization can train more service providers.

service inseparability

A major characteristic of services - they are produced and consumed at the same time and cannot he separated from their providers, whether the providers are people or machines.

• Variability

As services involve people in production and consumption, there is considerable potential for variability. Service variability means that the quality of services depends on who provides them, as well as when, where and how they are provided. As such, service quality Is difficult to control. For example, some hotels have reputations for providing better service than others. Within a given hotel, one registration-desk employee may be cheerful and efficient, whereas another, standing just a few metres away, may be unpleasant and slow. Even the quality of a single employee's service varies according to his or her energy and frame of mint! at the time of each customer contact. For example, two services offered by the same solicitor may not be identical in performance.

service variability A major characteristic of services—theirquality may vary greatly, depending on -who provides them and when, where and how.

Services are perishable: empty seats at slack times cannot be stored for later n,se during peftfe periods.

Services are perishable: empty seats at slack times cannot be stored for later n,se during peftfe periods.

Service firms ean take several steps towards quality control." First, they can select and train their personnel carefully. Airlines, hanks and hotels, for example, invest large sums of money in training their employees to give good service, Business-class customers flying S1A should find friendly and helpful personnel servicing them, whatever the time, duration and destination of their travel, Second, they can motivate staff by providing employee incentives that emphasize quality, such as employee-ot'-t he-month awards or bonuses based on customer feedback. Third, they can make service employees more visible and accountable to consumers - car dealerships ean let customers talk directly with the mechanics working on their cars. A firm ean eheck customer satisfaction regularly through suggestion and complaint systems, customer surveys and comparison shopping. When poor service is found, it is corrected. Fourth, service firms can increase the consistency of employee performance by substituting equipment for staff (e.g. vending machines, automatic cash dispensers), and through heavy enforcement of standardized as well as detailed job procedures (e.g. Walt Disney's theme parks, McDonald's and Club Med).

service perishability A major characteristic of services - they cannot be scored for Inter sale or use.

• Perishability

Service perishability means that services cannot be stored for later sale or use, In some countries, dentists and general practitioners charge patients for missed appointments because the service value existed only at that point and disappeared when the patient did not show up. The perishability of services is not a problem when demand is steady. However, when demand fluctuates, service firms often have difficult problems. For example, public transportation companies have to own much more equipment because of rush-hour demand than they would if demand were even throughout the day.

.Service firms ean use several strategies for producing a better match between demand and supply. On the demand side, differential pricing — that is, charging different prices at different times - will shift some demand from peak periods to off-peak periods. Examples are cheaper early-evening movie prices, low-season holidays and reduced weekend train fares. Airline companies offer heavily discounted 'stand-by' tickets to fill unbooked .seats. Or non-peak demand can be increased, as in the case of business hotels developing minivacation weekends for

tourists. Complementary services can be offered during peak times to provide alternatives to waiting customers, such as cocktail lounges to sit in while waiting for a restaurant table and automatic tellers in banks. Reservation systems can also help manage the demand level - airlines, hotels and doctors use them regularly.

On the supply side, firms can hire part-time employees to serve peak demand. Schools add part-time teachers when enrolment goes up, and restaurants call in part-time waiters and waitresses to handle busy shifts. Peak-time demand can be handled more efficiently by rescheduling work so that employees do only essential tasks during peak periods. Some straightforward tasks can be shifted to consumers (e.g. packing their own groceries). Or providers can share services, as when several hospitals share an expensive piece of medical equipment. Finally, a firm can plan ahead for expansion, as when an airline company buys more wide-bodied jumbo jets in anticipation of future growth in international air travel.

• Lack of Ownership

When customers buy physical goods, such as cars and computers, they have personal access to the product for an unlimited time. They actually own the product. They can even sell it when they no longer wish to own it. In contrast, service products lack that quality of ownership. The service consumer often has access to the service for a limited time. An insurance policy is yours only when you have paid the premium and continue to renew it. A holiday is experienced and, hopefully, enjoyed, but after the event, it remains ephemeral, unlike a product in the hand. Because of the lack of ownership, service providers must make a special effort to reinforce their brand identity and affinity with the consumer by one or more of the following methods:

I. They could offer incentives to consumers to use their service again, as in the case of frequent-flyer schemes promoted by British Airways and other big airlines.

The Death Business: Marketing Funeral Services

Marketing

Highlight 15.1

Marketing

tion, around £806. This is cheap compared to Europe: a burial in France, for example, costs £1,102; in Germany, £1,127; and in Belgium, £1,159. With funeral directors facing increasing pressure to abide by the voluntary codes of practice and enforcement procedures operated by the industry's main body, the National Assoeation of Funeral Directors, excessive pricing is often inappropriate as a means of propping up margins. But pricing uncertainty has favoured funeral directors, who have responded by encouraging people to take advantage of the prepayment funeral schemes — a US idea - thus allowing undertakers to price their service in advance.

Funeral directors use a variety of methods to promote their service. TV advertising and other media advertising are used to create awareness of prepayment schemes. The Go-op holds 'open days' at its funeral homes, where visitors are greeted with a video, say, and literature about the work carried out in preparing for a funeral. Independent undertakers rely heavily on personal or word-of-mouth recommendation to gain customers.

All the marketing efforts in the 1990s are based on the assumption that people's attitudes regarding death are changing, that people are becoming more conscious of 'dying costs' and are, therefore, more witting to think and plan ahead tiian ever before. Educating the public to consider funerals in advance is hard going. But there are signs that people are prepared to be more imaginative about funerals - one man recendy arranged to have a jazz band play at his - although most customers still opt for a traditional funeral.

Some countries are less inhibited. In Japan, for example, death can be celebrated with a gusto that few in the West embrace. The Gyokuzenin funeral business charges £3,000 for a 60-minute 'music and light' funeral, in which synthesized Buddhist chants, together with an elaborate laser show, take the deceased to a new hi-tech world. Some of Tokyo's 'full-service' funeral homes could charge up to £25,000 for a funeral. Sharper operators have augmented their business by running their own minihotels where out-of-town mourners can stay. They 'add value' to the core service by having on-site catering and flower-arranging. They will also take care of Japan's complex religious rituals, with 'tangible' support given in the way of books and magazines for people who need to learn the funeral rites. Japan's rapidly ageing population has proved a boon to the industry, which is seeing an increase in deaths of around 2 per cent a year! New entrants are muscling into this profitable business. Quality control has become an issue. Established funeral firms are turning to 'professionahzation' to differentiate their offering and to see off the 'upstarts'. In co-operation with the Ministry' of Labour, funeral operators have started a certification course - anyone can don a black coat and set up a funeral home, but to be a funeral director, you must have a certificate.

SOURCES: Drawn extensively from David Churchill, 'Grave undertakings'. Ainrketinft liusinesn (October J 992). pp. 435; Stephen Nathan, 'Invasion of the body matchers', The European (9-15 September 1994). p. 29; Caroline Sou they, 'Plantsbrook advances 8 per cent despite fall in death rate', Financial Times (9 September 1994), p. 20; 'Death, Japanese style', The Rconomisi (15 March 1997), p. 80-

They could create membership clubs or associations to give an impression of ownership (e.g. British Airways' executive clubs for air travellers. Toshiba's cookery clubs for microwave oven users, IKEA's family club membership).

Where appropriate, service providers might turn the disadvantage of non-ownership into a benefit: for example, an industrial design consultant might argue that, by employing his or her expertise, the customer would actually bo reducing costs, given that the alternative would be for that customer to employ a full-time designer with equally specialized knowledge. Paying for access to services rather than performing the activities in-house (e.g. warehousing) reduces capital cost, while also giving greater flexibility to a business.

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Responses

  • alice
    How would you make a funeral product more tangible?
    6 years ago

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