Nature and Categories of Services

Activity 1 Create a list of 10 services Create a list of 10 services List at least 3 service provider’s names List at least 3 service provider’s names –Time allotted: 5 minutes

What are Services? What are Services?

“Services are deeds, processes, and performances” - Zeithaml et al

A few Definitions….. Activities, benefits, or satisfactions which are offered for sale, or provided in connection with the sale of goods Activities, benefits, or satisfactions which are offered for sale, or provided in connection with the sale of goods - Amercican Marketing Association - Amercican Marketing Association A service is an act or performance offered by one party to another. Although the process may be tied to a physical product, the performance is essentially intangible and does not normally result in ownership of any of the factors of production - Christopher Lovelock A service is an act or performance offered by one party to another. Although the process may be tied to a physical product, the performance is essentially intangible and does not normally result in ownership of any of the factors of production - Christopher Lovelock

A few Definitions….. Any 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. Any 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. - Kotler and Bloom - Kotler and Bloom A service is an activity or series of activities of more or less intangible nature that normally, not necessarily, take place in interactions between the customer and service employees and/or physical resources or goods and/or system of the service provider, which are provided as solution to customer problems - Gronross A service is an activity or series of activities of more or less intangible nature that normally, not necessarily, take place in interactions between the customer and service employees and/or physical resources or goods and/or system of the service provider, which are provided as solution to customer problems - Gronross

So, Services…….. Are deeds, performances or activities offered by one party to another Are deeds, performances or activities offered by one party to another Are essentially intangible Are essentially intangible Do not result in the ownership of anything Do not result in the ownership of anything Take place in interactions between the customer and the service provider Take place in interactions between the customer and the service provider

Service as Theater “ All the world’s a stage and all the men and women merely players. They have their exits and their entrances and each man in his time plays many parts” “ All the world’s a stage and all the men and women merely players. They have their exits and their entrances and each man in his time plays many parts” William Shakespeare William Shakespeare As You Like It As You Like It

Characteristics of Services Intangibility Intangibility –The potential customer is unable to perceive the service before the service delivery Heterogeneity Heterogeneity –The quality of the service may vary depending on who provides it Inseparability Inseparability –Simultaneous Production and Consumption Perishability Perishability –Cannot be stored for later sales or use

Physical Goods Services HomogeneousHeterogeneous Production and distribution are separated from consumption Production, distribution and consumption are simultaneous processes A thing An activity or process Core value produced in factory Core value produced in buyer- seller interactions Customers do not participate in production process Customers participate in production Can be kept in stock Cannot be kept in stock Transfer of ownership No transfer of ownership

Characteristics of Services vs. Goods GoodsServicesImplications TangibleIntangible Services cannot be inventoried Services cannot be inventoried Services cannot be readily displayed or communicated Services cannot be readily displayed or communicated StandardizedHeterogeneous Pricing is difficult Pricing is difficult Service delivery and customer satisfaction depend on employee & customer actions Service delivery and customer satisfaction depend on employee & customer actions Service quality depends on uncontrollable factors Service quality depends on uncontrollable factors There is no sure knowledge that the service delivered matches what was planned and promoted There is no sure knowledge that the service delivered matches what was planned and promoted

Characteristics of Services vs. Goods GoodsServicesImplications Production separate from consumption Inseparable Customers participate in and affect the transaction Customers participate in and affect the transaction Customers affect each other Customers affect each other Employees affect the service outcome Employees affect the service outcome Mass production is difficult Mass production is difficult NonperishablePerishable Difficult to synchronize supply and demand with services Difficult to synchronize supply and demand with services Services cannot be returned or resold Services cannot be returned or resold

Activity 2 Give examples of each of the following type. Also list the names of at least two companies offering that good/service. Give examples of each of the following type. Also list the names of at least two companies offering that good/service. –A pure tangible good –Tangible good with accompanying service –A major service with accompanying minor goods or services –A pure service  Time allowed: 5 minutes

Categories of Goods - Services A pure tangible good A pure tangible good Tangible good with accompanying service Tangible good with accompanying service A major service with accompanying minor goods or services A major service with accompanying minor goods or services A pure service A pure service …….Kotler’s Categorization …….Kotler’s Categorization

Activity 3 A list of simple goods/services is provided in the next slide A list of simple goods/services is provided in the next slide Place these services in an appropriate position in the following continuum: Place these services in an appropriate position in the following continuum: Tangible ____________________ Intangible Tangible ____________________ Intangible dominant dominant dominant dominant

List for Activity 3 Salt Salt Soft drinks Soft drinks Detergents Detergents Automobiles Automobiles Cosmetics Cosmetics Fast-food outlets Fast-food outlets Ad agencies Ad agencies Airlines Airlines Investment management Investment management Consulting Consulting Teaching Teaching

“Breaking free from product marketing” Lynn Shostack, 1977

Tangibility Spectrum Tangible Dominant Intangible Dominant Salt Soft Drinks Detergents Automobiles Cosmetics Advertising Agencies Airlines Investment Management Consulting Teaching Fast-food Outlets Fast-food Outlets

Activity - 4 A list of services is provided next. A list of services is provided next. Place these in an appropriate quadrant in the matrix below: Place these in an appropriate quadrant in the matrix below: People Processing Possession Processing Mental Stimulus Processing Information Processing (directed at intangible assets) TANGIBLE ACTS DIRECTED AT PEOPLEDIRECTED AT POSSESSIONS TANGIBLE ACTS

List for Activity - 4 Health care Health care Accounting Accounting Lodging Lodging Beauty salons Beauty salons Phisiotherapy Phisiotherapy Music Concerts Music Concerts Insurance Insurance Freight transportation Freight transportation Fitness center Fitness center Restaurants Restaurants Legal services Legal services Advertising Advertising Passenger transportation Passenger transportation Broadcasting Broadcasting Repair and Maintenance Repair and Maintenance Landscaping Landscaping Psychotherapy Psychotherapy Banking Banking Laundry and Dry Cleaning Laundry and Dry Cleaning Education Education

“Classifying services to gain strategic marketing insights” Christopher Lovelock, 1983

Lovelock’s Classification People Processing Possession Processing Mental Stimulus Processing Information Processing e.g., passenger transportation, healthcare, lodging, beauty salons, fitness center e.g., freight transportation, repair and maintenance, laundry and dry cleaning, landscaping e.g., broadcasting, Education, advertising, music concert, psychotherapy e.g., accounting, Insurance, legal services, banking TANGIBLE ACTS INTANGIBLE ACTS DIRECTED AT PEOPLEDIRECTED AT POSSESSIONS What is the Nature of the Service Act? Who or What is the Direct Recipient of the Service?