03 service characteristics

Goods Vs Services

Marketing of Services1

Are Goods & Services

different ?

Basic Differences between Goods &

Services


Customers do not obtain ownership of services1

Service products are intangibleperformances, & not objects2

Customers often actively involved in production process3


Services


Time factor is more important--speed may be key4

Often difficult for customers to evaluate5

Absence of inventories after production6


Services


More variability in operational inputs and outputs--harder to improve productivity, control quality

7

Delivery systems include electronicand physical channels8

The Four

Is

Characteristics of Services

Characteristics of Services -


Intangibility Inseparability

Inconsistency or Variability

Inventory Perish ability

Four Is of Services


Intangibility

Inseparability

Inconsistancy

Inventory perishability

Services cannot be touched, seen, tasted, heard, or felt in the

same manner as goods.

Implications of Intangibility

Challenges Solutions9

1. No physical attributes to demonstrate while selling - Lack of Tangible attributes: which can be

touched,

smelled,

seen,

tasted or

heard prior to purchase.

Stress tangible cues:

Tangible goods which are included in the service offer

Physical environment in which the service production or consumption process takes place

Tangible evidence of service performance

Implications of Intangibility


2. Cannot be examined by customer before purchase

3. Risk of loss of integrity -

This is not what you told me I am going to get.

advertised claims cannot be verified

Do not over-promise &

deliver as promised

Communicate explicitly, no

implied meanings

Create strong corporate

image- BRAND

Stimulate word-of-mouth

communications.

Use personal sources of

information.

Provide tangible evidence

for assurance

Four Is of Services


1

Intangibility

Inseparability

Inconsistancy


Services that cannot be touched, seen, tasted, heard, or felt in the


A characteristic of services that allows them to be produced and

consumed simultaneously.

Implications of Inseparability


1. Combined productivity

effect-

Customer & employee

jointly participate &

influence transaction

Best net-performance

with matching

contribution of

customer &

employees

Inefficiency of anyone

pulls other down.

Automate service

processes.

Develop processes to

manage customers.

Select right customer

and train them for

participation

Emphasize right

selection and training

of employees

Implications of Inseparability


2. Simultaneous

production and

consumption of

Services :

Goods first produced,

then sold and then

consumed

Services first sold,

then produced and

consumed together

No mass production

More precise demand

forecasting & capacity

planning

Introduce self-service,

automation & electronic

delivery.

Customize services to

your advantage

Four Is of Services


4

Intangibility

Inseparability

Inconsistancy






A characteristic of services that makes them less standardized

and uniform than goods.

Why are Services Inconsistent

Presence of Human Element

Different Service employees will perform same

process differently

Different customer have different expectations &

capabilities

Same employee will perform same process differently

At two different times

Under different situation


Implications of Inconsistency


1. Limited control on

quality of service

delivered.

Dependence on:

Performance of

employee/s

Participation of

customer

Increase standardization

of procedures

Customization within

tolerance for individual

customer

Train employees &

Develop in process for

quality control

Implications of Inconsistency


2. No sure knowledge that the service delivered matches what was planned and promoted

3. Risk of loss of integrity -

This is not what you told me I am going to get.

This is not what I got last.

Educate customer &

employees : What is to be expected &

what not to.

Clearly define &

communicate acceptable

variance in service delivery.

Keep measuring customer

expectation and monitoring

satisfaction regularly

Encourage employees to

communicate with

customers to mitigate

dissonance.

Four Is of Services


8

Intangibility

Inseparability

Inconsistancy






A characteristic of services that makes them less standardized

and uniform than goods.

A characteristics of services that prevents them from being stored,

warehoused, or inventoried.

Implications of Inventory Perishability


1. Difficult demand-

capacity

synchronization:

Services can not be

stocked

Capacity loss

Loss of unfulfilled

Demand

Dynamic & precision

demand forecasting

& capacity planning

Manage demand

shifting

Manage capacity

flexing

Implications of Inventory Perishability


2. Customer

dissatisfaction

Service once fully

or partially

consumed, can not

be returned or

exchanged

Clarity in understanding customer needs

Unambiguous communication to customer

Monitor customer expectations & satisfaction

Develop service-recovery & complaint resolution processes.

Theodore Levitt (worlds best known marketing expert) commented 30 years ago:There are no such things as Service or

manufacturing industries. There are only industries whose service components are greater or less than those of other industries.


1

03 service characteristics

Documents