Gilbert arap Bor
Catholic University of Eastern
Africa: Gaba Campus, Eldoret
SCHOOL OF BUSINESS & ECONOMICS
Department of Marketing & Management
CMK 313 – Marketing of Services
Chapter 2:
Unique Characteristics of Services

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Chapter Objectives
1. Characteristics of Services Compared to
Goods
2. Unique Characteristics of Services
1. Intangibility
2. Heterogeneity
3. Inseparability
4. Perishability
3. Major marketing task facing service
companies

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Characteristics of Services
Compared to Goods
• There is a general agreement that differences
between goods and services exist; the distinctive
characteristics of services pose challenges (and
advantages) for managers of services.
• All services share four (4) unique characteristics
that distinguish them from physical products:
1. Intangibility
2. Heterogeneity (Variability)
3. Inseparability – Simultaneous Production of Services
4. Perishability

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Goods vs. Services
Goods Services Resulting implications
Tangible Intangible 1. Services cannot be inventoried
2. Services cannot be easily patented
3. Services cannot be easily
communicated or displayed
4. Pricing is difficult
Homogeneous Heterogeneous 1. Service delivery & customer
satisfaction depend on employee
and customer actions.
2. Service quality depend on many
uncontrollable factors
3. There is no sure knowledge that
the service delivered matches
what was planned and promised.

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Goods vs. Services
Goods Services Resulting implications
Production
and
distribution
are separated
from
consumption
Production,
distribution and
consumption
are
simultaneous
processes -
inseparability
1. Customers participate in
and affect service
transaction.
2. Customers affect each
other
3. Employees affect the
service outcome.
4. Decentralization may be
essential
5. Mass production is
difficult.
Non-
perishable
Perishable 1. It is difficult to
synchronize supply and
demand for services.
2. Services cannot be
returned or resold

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Unique Characteristics of Services
1. Intangibility
1. Services cannot be inventoried; Hard to grasp, concept is abstract
2. Customer is unable to experience the ‘product’ prior to ‘purchase’
3. Dramatization often necessary for concept
• Intangibility generally makes the marketing of services a challenge
• Understanding how people buy services and the segments that exist is
just as important
• Knowing more about the value of customer segments is important --
some are more valuable than others
• Knowing what they value so that service levels can be tailored is also
important
• Marketing implications
1. Great marketing skills in tangibilising intangible offerings, i.e., in
surrounding them with “hard” peripheral attributes
2. Technical superiority and long term vision in new service development,
in order to protect a service from its non-patentability
3. Services cannot be inventoried – fluctuations in demand difficult to
manage
4. Creative communications skills, i.e., what message to communicate?

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Unique Characteristics of Services
2. Heterogeneity (Variability)
1. Service quality tends to vary considerably.
2. Difficulty in establishing consistency in quality
• across Providers or within providers
• across Time
• across Delivery Centers
• Marketing implications
1. Need to develop service blueprints , i.e., a production line approach
to the production and delivery process
2. Ability to find a balance between standardization and
personalization during service delivery
3. Ability for real time detection of which side of the encounter causes
service failure
4. Need for a mechanism of timely service recovery
5. Skillful selection and motivation of appropriate front-line employees

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Unique Characteristics of Services
3. Inseparability
1. It refers to the simultaneous production and
consumption of services
2. Outlet accessibility can limit the area covered by the
service.
3. Image is important: Image affects the perception of
the service.
4. Consumer is present and when service is produced;
Plays role in production.
5. Hard to separate the service provider and the service
6. Consumers interact with one another and may be
affected (positively or negatively) by this interaction.

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Unique Characteristics of Services
3. Inseparability
– Marketing implications
1. Mass production of services is difficult, if possible at all
2. No significant economies can be earned from centralization of
operations, since the service must be produced at the
convenience of customers (temporal and physical)
3. Service quality depends highly on what happens in real time, i.e.,
during the service encounter
4. Since customers have a vital role in the production and delivery
process, the service provider needs great skills to train them how
to play their role
5. The service provider must prove excellence each time the service
is produced
6. The service provider needs skills in order to tackle disruptions in
the production process, caused by problem customers

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Unique Characteristics of Services
4. Perishability
1. It refers to the fact that services cannot be saved, stored, resold
or returned, i.e. services cannot be stored or held in
inventory.
2. If not used when available, they “go to waste”.
3. Difficulties in synchronizing supply and demand for services
– Marketing implications
1. Need for developing an as accurate as possible demand
forecasting mechanism
2. Need for a creative plan for capacity utilization
3. Need for the implementation of strategies and actions to
accommodate malcontent customers from non-returnable
services

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Challenges and Questions for
Service Marketers
• Very real and distinctive challenges face service marketers as a
result of the basic characteristics of services.
• Some of the difficult questions:
1. How can service quality be defined and improved when product is intangible
and non-standardized?
2. How can new services be designed and tested effectively when the service is
essentially an intangible process?
3. How can the firm be sure it is communicating a consistent and relevant
image when so many elements of the marketing mix communicate to
customers ; some of these being the service providers?
4. How does the firm accommodate fluctuating demand when capacity is fixed
and the service itself is perishable?
5. How can the firm motivate and select service employees who, because the
service is delivered in real time, become a critical part of the service product
itself?
6. How should prices be set when it is difficult to determine the actual cost of
production?

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Challenges and Questions for
Service Marketers
• Very real and distinctive challenges face service marketers as a
result of the basic characteristics of services.
• Some of the difficult questions:
7. How should the firm be organized so that good strategic and tactical
decisions are made when a decision in any functional area may have
significant impact on the other areas?
8. How can the balance between standardization and personalization be
determined to maximize both the efficiency of the organization and
satisfaction of its customers?
9. How can the organization protect new service concepts from competitors
when service processes cannot be readily patented?
10. How does the firm communicate quality and value to consumers when the
offering is intangible and cannot be readily tried or displayed?
11. How can the firm ensure the delivery of consistent quality service when both
the firm’s employees and the customers themselves can affect the service
outcome?

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The Goods/Service Continuum
• In reality, it is often very difficult to separate product from
services.
• Most product are actually a combination of goods and
services.
• We need to identify to what extent a product is characterized
by tangible vs. intangible properties.
• The purchase of a car still has service components, including
the services of a mechanic, and the use of a comfortable
customer launch while waiting for the car to be serviced.
• The purchase of a “pure service” like a makeover at a
beautician’s clinic still has product components like the
various lotions, powders, and lipstick that are used by the
cosmetologist.

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The Goods/Service Continuum
• In the goods/service continuum, we distinguish among
products that are either dominated by goods or services.
• Some products are dominated by tangible or intangible
characteristics, e.g. salt vs. teaching
• Others tend to have a mixture of goods and services, e.g.
flying on an airplane.
• As the product approaches the tangible pole of the
continuum, there is fairly little emphasis on service , and
vice versa.
• Towards the middle of the continuum, both goods and
services contribute to the quality of the product.

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The Goods/Service Continuum
Canned
foods
Ready-
made
clothes
Auto-
mobiles
Draperies,
Carpets
Rest-
aurant
meals
Repairs:
auto, house,
landscaping
Air
travel
Insurance,
Consulting,
Teaching
MOSTLY GOODS
MOSTLY SERVICES

Service Marketing Mix/Extended Marketing
Mix – 4 More Ps
• The service marketing mix comprises of the 4’p’s.
These are:
• Product
• Price
• Place
• Promotion
• People
• Process
• Physical evidence
• Productivity and quality
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Traditional Marketing Mix
PRODUCT PLACE PROMOTION PRICE
Physical good
features
Channel type Promotion blend Flexibility
Quality level Exposure Salespeople
• Selection
• Training
• Incentives
Price level
Accessories Intermediaries Advertising
• Media types
• Types of ads
Terms
Packaging Outlet locations Sales promotion Differentiation
Warranties Transportation Publicity Discounts
Product lines Storage Internet/web
strategy
Allowances
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PEOPLE PHYSICAL EVIDENCE PROCESS PRODUCTIVITY
Employees
• Recruiting
• Training
• Motivation
• Rewards
• Teamwork
Facility design Flow of
activities
• Standardized
• Customized
Customers
• Education
• Training
Equipment Number of
steps
• Simple
• Complex
Signage Customer
involvement
Employee dress
Other tangibles
• Reports
• Business cards
• Statements
• Guarantees
Extended Marketing Mix for Services

The additional 4 Ps of Service Marketing
1. People
– All humans who play a role in service delivery and who influence the
perceptions of customers
– Service delivery employees (front-line staff)
– The general staff of the service company
– The customer
– The other customers that are present in the production and delivery
process
– An essential ingredient to any service provision is the use of appropriate
staff and people.
– Recruiting the right staff and training them appropriately in the delivery of
their service is essential if the organisation wants to obtain a form of
competitive advantage.
– Consumers make judgments and deliver perceptions of the service based
on the employees they interact with.
– Staff should have the appropriate interpersonal skills, attitude, and service
knowledge to provide the service that consumers are paying for.
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The additional 4 Ps of Service Marketing
2. Process
– Refers to the systems used to assist the organisation in delivering the
service.
– The actual procedure, mechanisms and flow of activities through
which a service is delivered – the service delivery and operating
systems.
– The dimensions of a process’s efficiency and effectiveness:
• Length: the number of steps that participants have to follow in order to
effect service delivery.
• Duration: the time that elapses from the first to the last activity of
the service delivery process.
• Logistical effectiveness: the degree of smoothness in the flow of the steps
of the service delivery process
• Banks that send out ATM Cards automatically when their customers’ old
ones expire again require an efficient process to identify expiry dates and
renewal. An efficient service that replaces old credit cards will foster
consumer loyalty and confidence in the company.
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The additional 4 Ps of Service Marketing
3. Physical Evidence
– The setting where the service is delivered. Where is the service being
delivered?
– Where the service company and the customer interact
– Any tangible components that facilitate performance or communication of
the service
– Physical Evidence is the element of the service mix which allows the
consumer again to make judgments on the organisation.
– If you walk into a restaurant your expectations are of a clean, friendly
environment.
– On an aircraft if you travel first class you expect enough room to be able to
stretch your legs or lie down!
– Physical evidence is an essential ingredient of the service mix.
– Consumers will make perceptions based on their sight of the service
provision which will have an impact on the organization's perceptual plan
of the service.
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The additional 4 Ps of Service Marketing
4. Productivity and Quality
– service productivity and its connection to service quality and
eventually to profits.
– In service operations the customer plays an active role in
influencing productivity and quality.
– Productivity and quality issues affect all members of a
network, not just the provider and the customer.
– This is clear from the new developments in relationship
marketing and imaginary (virtual) organizations.
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