deeds, processes and n

V.A, Zeithaml andM.I. Bitner said,"Services are more precise, it

formances. Although it seems thatthe definition is
This defhnition
provide
imnl.
orientation to the concept of services.
a marketing
the consumer is interested in deeds, processes and pertormances
that
perceiving the value of the service. activities performed by persons
Services may be defined as intangible
value perceptions among co,
machines or both for the purpose of creating
activity(ies) or benefit(s) produced :
sumers. Since services are intangible
association with the consumer, its quality results
the service provider, in
assessment by the consumer. Services are interactior
perception and value
perceived by consumers.
based performances whose quality is
SERVICES
DIFFERENTIATING GOODS FROM
difficult to draw a clear, demarcating line between goods and ser
It is very
Levitt, a renowned marketing spE
vices in amarketing offer Accordingto T.
physical product, an intangible servic:
cialist, In almost every tangible pureeverybody is in service He classifie:
Component is associated. Therefore,
products into two categories: search goods and experience goods." Search
goods are those that are packaged and customers can see,evaluate and go for
example, scooters, fans, locks and sc
a trial before making a purchase. For evaluated only after purchase anc
on. Experience goods are those that can be
consumption. For example, a holiday, travel and so on. marketing, classi
P. Kotler, one of the world's leading authorities on
the goods
fied products into the following five categories for establishing
services relationship:t
identical o
1. Pure Tangible Goods: These are like commodities that are
homogeneous. Differentiating these goods with supplier identity is dif
ficult. Consumers do not attach any specific value to a little-associated
service. Agricultural and unbranded goods (mostly from tiny and
Small-scale sectors) fall under this category.
2. Tangible Goods with Accompanying Services: In this case, consumers
give greater importance to the tangible part of the marketing offer.
However, the services accompanying tangible goods are also part of
the value assessment done by buyers. Buyers get the title of tangi
ble goods transferred and get ownership of the goods. The accom
panying services, though, accounting for a minor share in the tota!
offer, provide a competitive advantage to the seller:. In the light of
Significant developments that took place in technology development,
most producers are unable to find technical advantage of tangible
factors and find enormous sources of differentiation in accompany
ing services. A vast majority of manufacturing goods fall under this
category. The role of services under this category is to support the
tangible product. Services are identified and valued only in associa
tion with tangible goods.
 Introduction to Se

8. Hybrid: This is atypicall marketing offer where tangible goods and ser-
vices may be given equal importance by consumers, For example,
people patronize restaurants for both food and service. However, the
atribution of goods and services may not be equal in all restau
rants despite being important to consumers. In a five-star hotel, ser
vices take a prominent place when compared to food items, whereas
in ordinary restaurants the proportion may be more or less equal. In
fast food outlets, food may dominate as compared to services. There
fore, there is apossibility of having ahybrid category of products, but
it is uncommon to have a signihcant portion of such products in any
economy.
Services with Accompanying Tangible Goods: This is a marketing offer
in which the intangible part is dominant. People buy services but not
tangible goods involved in the production of services. Accompany
ing goods play a major role in the value assessment of services by the
consumer, For example, people buy mobility services from a trans
port organization. To provide these services, transport organizations
need tangibles such as buses, trucks, trains, helicopters, aeroplanes
and the like. Although consumers do not buy tangibles, the condition
of vehicles--both on the interior and the exterior--facilities, comfort,
speed and so on play a major role in assessing the value of the service.
A
vast majority of service products fall under this category.
5. Pure Service: Pure service is a marketing offer where consumers confine
themselves to valuing only the service they receive and nothing else.
Services without any support of goods can serve the purpose of users
as
and are capable of giving satisfaction to consumers. Services such
teaching, consultancy, idea selling and the like fall in this category.
and ser
Figure 1.1 presents the tangibility spectrum, illustrating goods
vices with varied proportions of tangibility and intangibility.

WHY SERVICES MARKETING?

should there be a sepa
Ihe basic questions that confront everyone are: Why
marketing concepts and tech
rate learning on services marketing? Are the applicable to services? Do
hiques developed for the manufacturing sector not answers to these ques
Services require distinctive strategies in marketing? The services marketing.
tions provide the basic platform for an understanding of
services marketing because
Adifferent marketing approach is necessary for
tollowing are the differences
services differ from goods in many respects. The
between physical goods and services.
Services are intangible. Goods are tangible,
homogeneous.
Services are heterogeneous whereas goods are
Droduced
Services are produced in buyer-seller interactions. Goods are
in a factory.
 Introduction to Ser

CHARACTERISTICS OF SERVICES
Services have basically six characteristics that greatly affect the design of mar
keting programmes. They are: (1)intangibility, (2) inseparability, (3) variabil
ity, (4) perishability, (5) customer participation and (6) lack of ownership.
Intangibility
Services are intangible. Unlike physical products, they cannot be seen, tasted In
felt, heard or smelt before they are bought. Intangibility creates a feeling of key
uncertainty about the outcome of a service, For example, a tourist does not dis
know about the exact outcome of experience before consuming the service; fro
a woman who purchases the services of a beauty parlour for getting a facial ab.
cannot foresee the exact result. This characteristic of the service makes buyers for
look for evidence of quality in the service offer. Buyers try to draw quality infer ver
ences from the components of service environment such as the place, people, ser

equipment, communication material, symbols and the technical design of the oft
service package. To handle the given marketing problem, service providers the
need to manage evidence. They should try to make the intangible tangible to Th.
the best possible extent. The service design should be able to transform intan to
gible services into concrete benefits. Let us take an example of an insurance the
company that wants to position itself as a modern insurance company. the
The process of a company to make a service tangible should include: int
Co
Location and Physical Setting: The location at which service outlets
are established should be accessible to target consumers. The physi
cal setting must be convenient for both employees and customers. The
layout and the trafficflow should be planned in such a way that wait
ing lines should not be long. The exterior design must be attractive
and indicative of the service level and the interior should be designed
meaningfully.
Employees and Agents Employees and agents should be sufficient in
number and busy in interactions. They should possess apleasant and neat
appearance, sharpness and knowledge of the service and the customers,
Hardware, Tools and Techniques: The company should be equipped
with the latest hardware that can support the service process and help
the employees in providing speedy and quality services to customers. C
The company should create an impression that it ses the state-of-the-art
technology in serving customers.
Communication: The material used for communicating with customers
should suggest efficiency and speed.

Inseparability
Services cannot be separated from the service provider. In fact, the produc
ion, delivery and consumption of a service
take place simultaneously in the
buyer-seller interactions. This characteristic of a service creates problems to
 eting

matter wher
the marketer, particularly in the case of market expansion. No productio
service providers intend to offer services, they should haye service
some service org:
units that offer the same service quality standards. However, technologie
nizations have reduced direct interactions by introducing new card, tele
cheque, credit
For example, bankingorganizations have introduced interactions. Thus
banking and ATMfacilitiesto minimize direct buyer-seller (online bank.
the customers of State Bank of India can interact through interest
Indian Railway:
ing), telephone, ATM, besides other conventional means. The
can be accessed through telephone, authorized agencies, Internet and so on.

Variability
Services are highly variable. It is almost impossible to have the same servic:
identi.
from the same seller the second time. No two customers can receive
f cal service, even though they experience it simultaneously. For example, the
ser
experiences of bus travellers vary with the seats they occupy. The experiences
uild of passengers sitting on the window side, inner side, front end and rear end
ond of the bus will not be similar, though they avail the service simultaneously.
Areceptionist of a hotel cannot extend the samne kind of smile to custom
se ers during all her working hours. Further, experiences vary with the knowl
edge, co-customers, the ability to participate, mood, and other behavioural
! variables of service consumers. Service organizations face major problems
in standardizing and communicating service standards because of this vari
ability. While customers expect from a company the communication relating
to service standards to arrive at a purchase decision, service providers often
struggle to develop service standards.
However, the variability of services can be used as an opportunity by ser
Ce vice organizations. Since innovation is the key to success, this characteristic
ofers enormous opportunities to introduce several changes in the service
offer without disturbing the basicstructure of the offer. The service provider
can offer better experiences and delight customers by introducing surprise
changes in the service package.

Perishability
Sa
Services perish; they cannot be stored. A half-full train that leaves the railway
station means that the service of the empty half remains unused. An unutilized
J service Gapacity cannot be used further. When the demand is stable,
perish
ability cannot be a problem to the service organization. However, service firms
S face many problems when demand fluctuates. The major challenge to these
firms is to balance the supply-demand positions. Thus,
demand
is one of the major tasks for service firms. To cite an example: management
Andhra Pradesh
State Road Transport Corporation (APSRTC)," established in 1932, found a
place in the Guinness Book of World Records in 1999 for
operating the larg
est number of buses. The corporation has a fleet of about 20,000 buses which
cover 6.63 million m and carry 127.87 million people to their destinations
every year. The corporation has received several awards for its performance
cing

matter whe,
the marketer, particularly in the case of market expansion. No productio on

service providers intend to offer services, they should have service fro
service ore.
units that offer the same service quality standards. However, Some tin
technologie
nizations have reduced direct interactions by introducing new CoL
credit card, tele
For example. banking organizations have introduced cheque,interactions. Thu: WO

banking and ATM faclities to minimize direct buyer-seller (online bank

tor

the customers of State Bank of India can interact through interest 08,
Railwax
ing), telephone, ATM, besides other conventional means. The Indian so on. pa
can be accessed through telephone, authorized agencies, Internet and De

Variability
Services are highly variable. It is almost impossible to have the same servic:
from the same seller the second time. No two customers can receive identi.
cal service, even though they experience it simultaneously, For example, the a
er
experiences of bus travellers vary with the seats they occupy. The experiences fo
ild of passengers sitting on the window side, inner side, front end and rear end al

nd
of the bus will not be similar, though they avail the service simultaneously.
A receptionist of a hotel cannot extend the same kind of smile to custom
ers during all her working hourg: Further, experiences vary with the knowl C
edge, co-customers, the ability to participate, mood, and other behavioural
variables of service consumers. Service organizations face major problems
in standardizing and communicating service standards because of this vari
ability. While customers expect from a company the communication relating
to service standards to arrive at a purchase decision, service providers often
struggle to develop service standards.
However, the variability of services can be used as an opportunity by ser
vice organizations. Since innovation is the key to success, this characteristic
ofers enormous opportunities to introduce several changes in the service
offer without disturbing the basic structure of the offer. The service provider
can offer better experiences and delight customers by introducing surprise
- changes in the service package.

Perishability
Services perish; they cannot be stored.l Ahalf-full train that leaves the railway
station means that the service of the empty half remains unused. An unutilized
service Gapacity cannot be used further. When the demand is stable, perish
ability cannot be a problem to the service organization. However, service firms
S face many problems when demand fluctuates. The major challenge to these
firms is to balance the supply-demand positions. Thus, demand
management
is one of the major tasks for service firms. To cite an example: Andhra
Pradesh
State Road Transport Corporation (APSRTC)," established in 1932, found a
place in the Guinness Book of World Records in 1999 for operating the larg
est number of buses. The corporation has a fleet of about 20,000
buses which
cover 6.63 million km and carry 127.87 million people to their destinations
every year. The corporation has received several awards for its performance
 on various
counts. APSRTC faced a serious problem of falling occupancy ratio
from 1997-98 to 2006-07. Local transporters like autos, rickshaws and other
tiny private transporters took away the demand from the corporation. The
corporation's future was in jeopardy due to accumulated losses. It primarily
worked on changing the attitude of the front-line employees from public sec-
tnr ego state to passenger-triendly behaviour besides other measures. In 2007
0g thecorporation made a profit after 10 years of successive losses. The occu
pancyratio increased from 65 per cent in 2004-05 to 70 per cent in 2007-08.
Demand management thus became vital for the corporation's success.12

Customer Participation
Service production is not a one-sided activity. Customers are co-producers Custor
Of a service. The production quality of the service greatly depends on the produ
ability, skilland performance of the employee as well as the ability and per service
formance of the customer In the service interaction, although the employee equall
and the customer are not the equal part of production, the role of the cus mance
fomer cannot be overemphasized. Service firms should make customers provid
aware of the service package and the production process through proper ity anc
Communication media, For example, tourists can perceivethe architecture, the cu
appearance and environmental beauty of Taj Mahal at Agra in many ways. Custor

But if informed about the legendary love story of Shah Jahan and Mumtaz which
Mahal, and the significance of the Taj Mahal as a symbol of their love, the tion" o
tourist involvement, experience and perceived quality change significantly. iy, ist
Tourists perceive greater value of their visit to the Taj Mahal. Service com the se
panies, therefore, should take necessary steps to ensure customer participa
tion, leading to a quality experience of the service. Customer participation
isgreatly influenced by the content, media and the mode of communication
with the customer, It may be necessary to train"' customers for efective par
ticipation in the service process and also to learn the methodology of quality
perception and assessment. Perfection from the organizations side in service
production cannot ensure positive results unless consumers too are effec
tively involved in the process. Therefore, specific and special orientation to
different groups of customers is necessary. Convi
Customization is one of the key strategies the service firms adopt to ensure by th
efficient and effective participation of customers. Customer participation tangi
is active in services such as medical treatment, hairdressing, health clubs, the tr
colleges and beauty care centres. much
an ex

Lack of Ownership noth

ot ice consumers acquire experience, not ownership, since services are intan Cons
its m
gible and perishable. However. this characteristic adds to the problems of the
Service marketer.Convincing the customer with tangible goods on which they disso
Wll have ownership through transfer of title is much easier than selling an the d
eperience where nothing remains after consumption, except the memory of Ogo
.Customer dissonance would be higher in the case of services than of goods.
12
Services Marketing

Due to these characteristics of services, service providers face varied pro

lems and challenges in marketing, as compared to the producers of goon
Ihe marketing challenges and strategic options due to service characteris
are presented in Table 1.1,.

Table 1.1 Marketing Challenges and Strategic Options in Services Marketing

Service Characteristics
Marketing Problems/Challenges Strategic Options
Intangibility " Cannot be communicated easily Making the service process tangible t,
" Consumer suspects due to absence of the maximum possible extent
concrete evidences " Managing and promoting word-of
"Design of total service package is not mouth communication
possible "Strengthening internal and external
" Comparative presentation is not possible marketing
Using relationship marketing
Inseparability . Problems of market expansion Minimizing customer interactions
" Maintenance of service quality " Innovating techniques of indirect
" Compulsory presence of consumer interaction
. Limited production capacity . Standardization to the maximum
"Operation at limited capacity possible extent
" Developing distribution network with
quality control mechanisms
Variability " Limited scope for standardization " More focus on
standardization
Not possible to communicate exactly . Internal marketing and employee
what the consumer is going to receive retention
. Quality can be determined only after the "
service is consumed
Positioning variation as a strength of
innovation
" Promoting research and innovations
Perishability "Storage of service is not possible . Demand management
" Sales volume should match the capacity " Capacity management
" Time pressure in sales "Tactical approaches
Continuous study on demand
patterns and competitive parameters
Customer participation " Customers are not controllable Effective external marketing
Production quality also depends on the . Customer education and training
customer's knowledge and ability to " Effective interactive marketing
participate Management of movements of truth
" Customers are evaluated at every stage of
. Effective internal marketing
service production
Lack of ownership " Nothing remains after consumption Making communication tangible
. Very less time for the consumer to " Customer relationship marketing
evaluate the product " Managing high level of company
" High consumer dissonance image