8/6/2019 How Would One Define Service

1/19

How would one define serviceHow would one define service

Services are the production of essentially intangible

benefits and experience, either alone or as part of a

tangible product, through some form of exchange,with the intention of satisfying the needs, wants and

desires of the consumers.

8/6/2019 How Would One Define Service

2/19

ORIGIN OF SERVICEORIGIN OF SERVICE

MARKETINGMARKETING Prior to the time of the IndustrialPrior to the time of the Industrial

Revolution, virtually all trade andRevolution, virtually all trade and

exchange processes involved someexchange processes involved somepersonal contact between suppliers andpersonal contact between suppliers and

their customers .their customers .

8/6/2019 How Would One Define Service

3/19

GROWTHGROWTH

The Growth of the services sector can beThe Growth of the services sector can be

gauged by looking at its contributions togauged by looking at its contributions to

different aspects of the economy.different aspects of the economy. The share of services in Indias GDP at factorThe share of services in Indias GDP at factor

cost (at current prices) increased rapidly: fromcost (at current prices) increased rapidly: from

30.5 per cent in 195030.5 per cent in 1950--51 to 55.2 per cent in51 to 55.2 per cent in

20092009--10 .10 .

8/6/2019 How Would One Define Service

4/19

India stands out for the size and dynamism of itsIndia stands out for the size and dynamism of itsservices sector.services sector.

The contribution of the services sector to the IndianThe contribution of the services sector to the Indianeconomy has been manifold: a 55.2 per cent share ineconomy has been manifold: a 55.2 per cent share ingross domestic product (GDP).gross domestic product (GDP).

Growing by 10 per cent annually, contributing toGrowing by 10 per cent annually, contributing toabout a quarter of total employment.about a quarter of total employment.

Accounting for a high share in foreign directAccounting for a high share in foreign direct

investment (FDI) inflows and over oneinvestment (FDI) inflows and over one--third of totalthird of totalexports, and recording very fast (27.4 per cent) exportexports, and recording very fast (27.4 per cent) exportgrowth through the first half of 2010growth through the first half of 2010--11.11.

8/6/2019 How Would One Define Service

5/19

8/6/2019 How Would One Define Service

6/19

8/6/2019 How Would One Define Service

7/19

EMERGENCE OF SERVICEEMERGENCE OF SERVICE

ECONOMYECONOMY In this fast changing world, service industriesIn this fast changing world, service industries

have already overtaken goods industries in thehave already overtaken goods industries in the

wealth creation process at least in thewealth creation process at least in thedeveloped countries.developed countries.

The growth of service industries can be tracedThe growth of service industries can be traced

to the economic development of society andto the economic development of society and

the sociothe socio--culture changes that haveculture changes that have

accompanied it.accompanied it.

8/6/2019 How Would One Define Service

8/19

Three related events of 1990s gave boost to serviceThree related events of 1990s gave boost to service

sector. Globalization of business and consumerssector. Globalization of business and consumers

taste powered boom in accountancy, law,taste powered boom in accountancy, law,entertainment and retailing.entertainment and retailing.

ReasonsReasons

1. More Disposable income.1. More Disposable income. 2. Higher percentage of women in labor force.2. Higher percentage of women in labor force.

3. Stagnant change in product differentiation.3. Stagnant change in product differentiation.

4. Change in life style.4. Change in life style. 5. Deregulation of service industry.5. Deregulation of service industry.

8/6/2019 How Would One Define Service

9/19

CLASSIFICATIONCLASSIFICATION

CLASSIFICATION BY INDUSTRY.CLASSIFICATION BY INDUSTRY.

CLASSIFICATION BY TARGET EFFECT.CLASSIFICATION BY TARGET EFFECT.

CLASSIFICATION BY LABORCLASSIFICATION BY LABORINTENSIVENESS.INTENSIVENESS.

BASED ON DEGREE OF CUSTOMERBASED ON DEGREE OF CUSTOMER

CONT

ACT

.CONT

ACT

. GOAL OF THE SERVICE PROVIDREGOAL OF THE SERVICE PROVIDRE

(PROFIT, NON PROFIT)(PROFIT, NON PROFIT)

8/6/2019 How Would One Define Service

10/19

NATURE OF SERVICESNATURE OF SERVICES

MARKETINGMARKETING IntangibilityIntangibility

InseparabilityInseparability

PresencePresence ofof otherother consumersconsumers

VariabilityVariability

PerishabilityPerishability

8/6/2019 How Would One Define Service

11/19

Implications of IntangibilityImplications of Intangibility

Services cannot be inventoriedServices cannot be inventoried

Services cannot be easily patentedServices cannot be easily patented

Services cannot be readily displayed orServices cannot be readily displayed or

communicatedcommunicated

Pricing is difficultPricing is difficult

8/6/2019 How Would One Define Service

12/19

8/6/2019 How Would One Define Service

13/19

Implications of SimultaneousImplications of Simultaneous

Production and ConsumptionProduction and Consumption Customers participate in and affect theCustomers participate in and affect the

transactiontransaction

Customers affect each otherCustomers affect each other

Employees affect the service outcomeEmployees affect the service outcome

Decentralization may be essentialDecentralization may be essential

Mass production is difficultMass production is difficult

8/6/2019 How Would One Define Service

14/19

Implications of PerishabilityImplications of Perishability

It is difficult to synchronize supply andIt is difficult to synchronize supply and

demand with servicesdemand with services

Services cannot be returned or resoldServices cannot be returned or resold

8/6/2019 How Would One Define Service

15/19

THE PS IN SERVISETHE PS IN SERVISE

MARKETINGMARKETING ProductProduct

PricePrice

PlacePlace

PromotionPromotion

PeoplePeople All human actors who play a part in service delivery and thus influence theAll human actors who play a part in service delivery and thus influence the

buyers perceptions: namely, the firms personnel, the customer, and otherbuyers perceptions: namely, the firms personnel, the customer, and othercustomers in the service environment.customers in the service environment.

Physical EvidencePhysical Evidence The environment in which the service is delivered and where the firm andThe environment in which the service is delivered and where the firm and

customer interact, and any tangible components that facilitate performance orcustomer interact, and any tangible components that facilitate performance orcommunication of the service.communication of the service.

ProcessProcess The actual procedures, mechanisms, and flow of activities by which the serviceThe actual procedures, mechanisms, and flow of activities by which the service

is deliveredis deliveredthe service delivery and operating systems.the service delivery and operating systems.

8/6/2019 How Would One Define Service

16/19

8/6/2019 How Would One Define Service

17/19

GOODS VS SERVICESGOODS VS SERVICES

Physical goodsPhysical goods ServicesServices

TangibleTangible IntangibleIntangible

HomogeneousHomogeneous HeterogeneousHeterogeneous

Production and distribution areProduction and distribution areseparated from consumptionseparated from consumption

Production, distribution andProduction, distribution andconsumption are simultaneousconsumption are simultaneous

processesprocesses

A thingA thing An activity or processAn activity or process

Core value processed in factoryCore value processed in factory Core value produced in the buyerCore value produced in the buyer--

seller interactionseller interaction

Customers do not participate in theCustomers do not participate in the

production processproduction process

Customers participate in productionCustomers participate in production

Can be kept in stockCan be kept in stock Cannot be kept in stockCannot be kept in stock

Transfer of ownershipTransfer of ownership No transfer of ownershipNo transfer of ownership

8/6/2019 How Would One Define Service

18/19

8/6/2019 How Would One Define Service

19/19

CHALLENGESCHALLENGES

Defining and improving qualityDefining and improving quality

Designing and testing new servicesDesigning and testing new services

Communicating and maintaining a consistent imageCommunicating and maintaining a consistent image

Accommodating fluctuating demandAccommodating fluctuating demand Motivating and sustaining employee commitmentMotivating and sustaining employee commitment

Coordinating marketing, operations, and human resourceCoordinating marketing, operations, and human resourceeffortsefforts

Setting pricesSetting prices

Finding a balance between standardization versusFinding a balance between standardization versuspersonalizationpersonalization

Ensuring the delivery of consistent qualityEnsuring the delivery of consistent quality