Course: Service Sector Management

Introduction
WHAT IS SERVICES
Services include all economic activities whose output is not a
physical product or construction, is generally consumed at the
time it is produced and provides added value in forms (such as
convenience, timeliness, comfort or health). That is essentially
intangible concerns of its first purchaser.

DIFFERENCES BETWEEN SERVICES AND

CUSTOMER SERVICES
A company like IBM offers repair and maintenance service of
equipment, consultancy, training services etc. These services
may include a tangible product like a report or train manual.
Customer Services , however is the service provided in support
of a company’s core product – like answering question , taking
orders ,dealing with billing issue , handling complaints etc
Typically th ere is no charge for customer service is essential for
building customer relationship . Customer services are hence
different from services provided for sale by a company. Federal
Express market and delivers services. It also provides a high
level of customer services. Its services are overnight package
delivery, and logistics services. Its customer services include
well trained staff who can answer all question on telephone and
etc.

CONCEPT OF ‘SERVICE MARKETING’

The perception of service marketing focuses on selling the

services in the best interest of users/customers. Marketing a
service is meant marketing something intangible. It is marketing
a promise. It is more selling yourself. In the marketing of
services, we go through a number of problems directly or
indirectly influencing the business index. The problems like
market se gmentation, marketing information system,
behavioural management are studied minutely which simplify
the task of formulating a sound mix for marketing, such as
Product mix, Promotion mix, Price mix and the Place mix. It is
important to mention that we find “People” an important mix of
marketing services. If we market the services in a right direction,
the available opportunities can be capitalized on optimally and
also it contributes substantially to the process of development. In
view of the above, we observe the following key points
regarding the concept or perception of services marketing:

It is a managerial process of managing the services. It is an

organized effort for providing a sound foundation for the
development of an organization. It is a social process helping an
organization to understand the emerging social problem and to
take part in the social transformation process to justify its
existence in the society.

SERVICE MANAGEMENT

Service Management is :

1) To understand the utility the customers receicve by

consuming or using the service offering of the organization

2) To understand how the organization (personnel, technology,

physical resources, systems and customers)will b able to
produce and deliver this utility
3) To understand how the organization should be developed and
managed so that the intended quality can be achieved

4) To make the organization function so that this quality can be

delivered on a continuous basis.

GOODS SERVICE CONTINUUM

As per Theodore Levit “There is no such things as service

industries. There are some service industries whose service
component are greater (or less) than those of other industries”.
Everybody is in service. The point that Leavitt was trying to put
across is that with almost every tangible physical product an
intangible servicecomponent is associated. Therefore every body
is in service.He has further put that goods can be put into two
categories

Prior purchase/use tangible

Search goods
Experienced goods: goods, which one can see or evaluate after
the purchase. After purchase/use In tangible

Experienced goods

Search goods are tangible goods and experienced goods are

intangible.
Philip kotler suggests 4 categories
1) Pure tangible (salt)
2) Major tangible with minor intangibles (soap)
3) Minor tangible with major intangibles (consultancy)
4) Pure service (teaching)

Tangible Dominant
Intangible Dominant

Salt Soft drinks Detergent Automobile Cosmetics Ad

agency Airlines consultancy teaching
The above diagram shows the Service – goods continuum –
some goods being tangible dominant others being service
dominant. The fast food outlets has almost 50/50 of tangible and
intangible parts i.e. in this case both tangible factors such (food)
and intangible such as (services) is important. That is the reason
it come in the middle. In case of other products like salt there
services won’t play any important role so it is more towards
tangible and in case of teaching profession it is purely service
dominated. We never known about service with out
experiencing and in this manner various goods fall in place
according to its category i.e. less service oriented or more
service oriented.

Characteristics of Services and its Marketing Implications

The main Characteristics of Services are :

 Intangibility
 Inseparability
 Heterogeneity
 Perishability
Intangibility

Services are actions and hence they are intangible. Due to this it
is not possible to stock services and hence fluctuations in
demand becomes difficult to manage. Hotels have same number
of rooms all through the year but the customers requiring the
room are always varying with some months seeing very few
customers while other months seeing a rush of customers.
Further services cannot be patented and any new concept can be
easily copied by competitors. These cannot be readily displayed
or easily communicated, and hence it will be difficult for the
consumers to assess the quality. This also creates a problem for
what to include in advertisements and promotional materials.
Further the actual cost of “unit service” is difficult to determine
and hence pricing becomes difficult.

Inseparability

Services are generally created or supplied simultaneously. They

are inseparable. For e.g., the entertainment industry, health
experts and other professionals create and offer their service at
the same given time. Services and their providers are associated
closely and thus, not separable. Donald Cowell states ‘Goods are
produced, sold and then consumed whereas the services are sold
and then produced and then consumed.’ A service is produced
when it is consumed eg. a dinning experience. Thus the
customers are present when the service is produced thus other
customer play an important role in satisfaction. The service
producer also plays an important role in quality. Thus mass
production is impossible, it is not possible to get economy of
scale by centralisation, operations has to be decentralised to
deliver to the consumer directly at convenient locations. A
“problem customer” can result in disruption of service
production process creating a dissatisfaction forhimself, other
customers and also to the service producer.

Heterogeneity

As services are produced by humans, hence no two services can

be identical. Further no two customers are precisely alike and
hence their experiences of the same service are different. Even
the same customer can be with different frame of mind at
different times – which results in differing satisfactions from the
same service at different times. Eg. A tax consultant may
provide different a service experience to two different customers
on the same day depending upon their needs and on whether the
consultant is meeting the customer when he is fresh in the
morning or tired at the end of the day. Because of this ensuring a
consistent quality becomes a challenging job. The quality
depends upon a number of factors like the customer, service
provides, other customers (their presence or even absence) etc.,
hence the service provider cannot know if the service is
delivered in a manner which has been originally planned and
promoted. Sometimes services are provided by a third party
further increasing the heterogeneity.

Perishability

Services cannot be stored, saved, resold or returned. A bad

haircut cannot be returned or resold to another customer. Hence
demand forecasting and creative planning to meet the demand is
a problem. Further one has to be right the first time or if things
go wrong one should have strong recovery strategies to retain
the customer goodwill. Due to these characteristics of services
the marketeers face a major challenge in marketing of Services.
REASONS FOR THE GROWTH OF SERVICE
INDUSTRY

 It is obvious that the growth in the services sector has been

substantive. The reasons for this
 growth are quite a few, some of which are summarized as
follows.
 Affluence: The increase in per capital income from Rupees
238.8 in 1950 to Rupees 11,934.5 in 1998 is an indicator of
he increase in general affluence has given rise to service
like pest-control, personal security, interior designer, etc.
 Leisure time: People do get some time to travel and
holiday and therefore there is a need for travel agencies,
resorts, hotels, and entertainment. There are other’s who
would like to utilize this time to improve their career
prospects and therefore there is a need for adult
education/distance learning/part time courses.
 Life expectancy: The health programmed have significantly
contributed to an increase in life
 expectancy given rise to services like old age homes,
nursing homes, health care, etc.
 Working wives: As more and more women have started
working, the need for day care for children has increased,
and so is the care with packed food and home delivery.
 Product complexity: A large no. of products are now being
purchased in households which can be serviced only by
specialized persons like water purifies, micro wave ovens,
home computers, etc. giving rise to the need for services
like after sales service agents for durables, maintenance
service providers, etc.
 Life complexity: As the daily routine gets busier,
individuals find it difficult to manage things on their own.
Their leads to an obvious need for tax consultants, legal
advisors, property advisers, etc.
 Resource scarcity and ecology: As the natural resources are
depleting and need for conservation is increasing, we have
seen the coming up of service providers like pollution
control agencies, car, pools, water management, etc.
 New products: the development in information technology
has given rise to services like PCOs, Pager service
providers, Web Shoppe, etc