Which of the following characteristics is not one that distinguishes services from products?

Introduction

The world economy nowadays is increasingly characterized as a service economy. This is primarily due to the increasing importance and share of the service sector in the economies of most developed and developing countries. In fact, the growth of the service sector has long been considered as indicative of a country’s economic progress.

Economic history tells us that all developing nations have invariably experienced a shift from agriculture to industry and then to the service sector as the main stay of the economy.

This shift has also brought about a change in the definition of goods and services themselves. No longer are goods considered separate from services. Rather, services now increasingly represent an integral part of the product and this interconnectedness of goods and services is represented on a goods-services continuum.

Definition and characteristics of Services

The American Marketing Association defines services as - “Activities, benefits and satisfactions which are offered for sale or are provided in connection with the sale of goods.”

The defining characteristics of a service are:

Intangibility: Services are intangible and do not have a physical existence. Hence services cannot be touched, held, tasted or smelt. This is most defining feature of a service and that which primarily differentiates it from a product. Also, it poses a unique challenge to those engaged in marketing a service as they need to attach tangible attributes to an otherwise intangible offering.

1. Heterogeneity/Variability: Given the very nature of services, each service offering is unique and cannot be exactly repeated even by the same service provider. While products can be mass produced and be homogenous the same is not true of services. eg: All burgers of a particular flavor at McDonalds are almost identical. However, the same is not true of the service rendered by the same counter staff consecutively to two customers.
2. Perishability: Services cannot be stored, saved, returned or resold once they have been used. Once rendered to a customer the service is completely consumed and cannot be delivered to another customer. eg: A customer dissatisfied with the services of a barber cannot return the service of the haircut that was rendered to him. At the most he may decide not to visit that particular barber in the future.
3. Inseparability/Simultaneity of production and consumption: This refers to the fact that services are generated and consumed within the same time frame. Eg: a haircut is delivered to and consumed by a customer simultaneously unlike, say, a takeaway burger which the customer may consume even after a few hours of purchase. Moreover, it is very difficult to separate a service from the service provider. Eg: the barber is necessarily a part of the service of a haircut that he is delivering to his customer.

Types of Services

1. Core Services: A service that is the primary purpose of the transaction. Eg: a haircut or the services of lawyer or teacher.
2. Supplementary Services: Services that are rendered as a corollary to the sale of a tangible product. Eg: Home delivery options offered by restaurants above a minimum bill value.

Difference between Goods and Services

Given below are the fundamental differences between physical goods and services:

Authorship/Referencing - About the Author(s)

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The service sector is growing rapidly worldwide. Majority of developed and developing countries experience the development of many service industries, which participate significantly in the national economies.

P. Kotler suggested that ”service is an activity or benefit 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”.

There are four characteristics of service: Intangibility, Inseparability, Variability, and Perishability (Kotler and Keller, 2007).

• As service's nature is intangibility, therefore manufacturing and service delivery is more complex than a product.
• Inseparability is a significant characteristic that distinguishes a service from a     product according to the simultaneous production and consumption.
• Due to the service's variability, it's difficult to be controlled, because it greatly relies on the service's provider, moreover when, where and how it's provided.
• Perishability is one of the major characteristics of service, that it can't be stored for later use or sale (No inventory).

In order to deliver the overall service offer to a target market, the marketing mix elements should be coherent, coordinated, integrated and consistent with each other to produce the synergistic effect of them. (Lovelock, 2001).

The main objective of service marketers is to create and provide service that satisfies consumer needs and expectations, therefore achieving organizational goals.  Consequently, marketers should work on understanding how people make their buying decisions and what determines their satisfaction during the service consumption stages: pre-purchase, service encounter, and post-encounter.

To gain  a competitive advantage in the  global market, successful organization should adopt the marketing strategy (overall cost leadership / differentiation / focus) that is based on the marketing concept which holds that the key to achieving company’s organizational goals is being more effective than competitors in creating, delivering, and communicating superior customer value to target customers, and therefore ensuring profits through customer satisfaction.

The positioning of services is even more important than the positioning of goods because services tend to be intangible, so differentiation becomes a key issue in making the service distinctive in the perception of the customer's mind. Positioning is concerned with the identification, development, and communication of the attributes which a service company intends to use to make its market offering recognizable and superior to the competing services.

A customer-focused organization requires improving service quality as a critical element of differentiation. It's related to the long-term evaluation of the service performance and is crucial to customer satisfaction which is the difference between perception and expectation, moreover, customer satisfaction will become a key factor for business success in the future.

In order to develop long-term relationships, it is necessary to build customer involvement, commitment, and trust. In service companies focused on building loyalty, customer service plays an important role in their marketing strategies and is an essential element in creating service quality and customer satisfaction.

An organization which strategy focuses on delivering service excellence was more successful. This era is the era of customers and for the success and survival in this competitive market, organizations should emphasize on quality service and this should be integrated into the strategy (Chowdhary and Prakash, 2007).

Author: Hend Hassan, lecturer at LIGS University

References

Chowdhary, Prakash, (2007) "Prioritizing service quality dimensions", Managing Service Quality: An International Journal, Vol. 17 Issue: 5, pp.493-509, https://doi.org/10.1108/09604520710817325

Kotler, P., and Keller (2007) A Framework for Marketing Management 3rd ed. New Jersey: Prentice Hall.

Lovelock, C.H., Patterson, P.G. and R.H. Walker, (2001). “Services Marketing: An Asia-Pacific Perspective”, 2nd edition, Prentice Hall, NSW.

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