Define services & Explain distinctive characteristics of services

Define services & Explain distinctive characteristics of services.

Ans.    According to American Marketing Association, “Services are the activities, benefits or satisfactions which are offered for sale or are provided in connection with the sale of goods.” A service is an act or a performance offered by one party to another whose production may or may not be attached to the physical product.

            Services, which are economic activities, are solutions to customer problems or needs. They are typically aimed at improving, upholding or sustaining the lifestyle of the customer. Also includes social efforts by the government to fight the evils present in the society.

For e.g. : services offered by banks, insurance companies etc.

Certain characteristics distinguish goods from services. They are :

• Intangibility
• Inseparability
• Inconsistency
• Perishability

1.      Intangibility : The primary characteristic that distinguishes services from goods is intangibility. Intangibility refers to the characteristics of not being capable of assessment by customer’s sense of taste, touch, sight, smell or hearing. Services such as banking insurance and education cannot be physically possessed like a tangible goods. Intangible services are more difficult for consumer to evaluate than tangible goods. For example it is more difficult to evaluate the services provided by a physician than to evaluate an automobile. (tangible goods)

2.      Inseparability: Another characteristic of service is the inseparability or indivisible nature of production and consumption of services. Services like education are generally produced and consumed at the same time. Due to this nature, the service provider plays a very important role in delivery of services. For example a dentist is the actual service provider and must be physically present along with the consumer when the service is produced and consumed. In many cases the service provider is the part of service. In fact, services are marked by two kinds of inseparability:

i)       Inseparability of production and consumption

ii)      Inseparability of the services from the person who possesses the skill and performs the services.

Service is produced and consumed simultaneously. This is not so with physical products (goods). Moreover consumer also plays an active role in the production and delivery of services.

3.      Inconsistency : It refers to the variation in performance of services. People perform most services and people are not always consistent in their performance. Performance may vary from one individual or service to another within the same organization or in the service one individual provides from day to day and from customer to customer. Thus services are much more difficult to standardize than tangible goods. For example, an airline may not give the same quality of service on each trip; All repair jobs which a mechanic does may be consistent.

4.      Inventory-Less or Perishability : Perishability is the characteristic where the service capacity unused in one time period cannot be stored for use in the future. Services are highly perishable. They cannot be stored, there are no inventories in the case of a service. For example, in an airline industry the morning flight cannot be stored for the evening.

5.      Cannot be Produced in Anticipation of Demand : Goods can be produced in anticipation of demand. For instance, cars, computers, CDs, etc., can be produced in advance and stored till they are demanded in the market. However, services cannot be produced in anticipation of demand. For instance, one cannot produce and stock hairstyles, airline travelling, etc.

6.      Cannot be Returned to Seller Once Used: A defective computer can be returned back to the seller, but a defective hairstyle or poor quality of teaching/ counseling cannot be returned back to the service provider. Because of this reason, consumer of services do prefer to take services of highly skilled specialists, may be even quite a distance away.

7.      Time Utility is Crucial : In services, time factor is crucial. A tangible item such as car can be stocked for several days or even months before it is sold to the buyer. However, in the case of services, a service provider who sits idle waiting for customers to turn loses that time forever. This is why some service providers like doctors insist on prior appointments by their clients.

8.      No Ownership Transfer : Services may not result in transfer of ownership rights from the service provider to the customer. However, in case of marketing of goods, the ownership transfer takes place once the sale contract takes place.

9.      Direct Channel : Generally, services are provided directly to the customers. Rarely middlemen may be present in case of services marketing. For instance, if a client needs bank services or hotel services he may directly go to the service provider. Even where indirect channels are used, such as in the case of insurance services, travel and tours. the channel of distribution will be restricted to one or two intermediaries.

A common approach for distribution of some services to a broad market is through franchising like McDonalds Fast Food Chain. The franchiser provides to the franchisee the rights of operating the business under the franchiser’s trade name for a consideration of royalty or franchising fees.

10.    Need for Personal Interaction : In services marketing there is a need for personal interaction between the service provider and the customer. Therefore, service providers can customize the services as per the needs of individual customers. For instance, there is a need for personal interaction between a doctor and a patient and therefore the doctor will treat individual patients differently.