1. Services are intangible economic activities that create value for customers by bringing about a desired change. 2. Services have unique characteristics such as intangibility, inseparability, variability, perishability, and customer participation that create marketing challenges. 3. The strategic options to address these challenges include making services more tangible, customizing without compromising quality, demand management, and relationship marketing.

1. Services Marketing
By Himanshu Upadhyay
MBA/BBA-Specialization
MBM3/BBM2

2. “There are no such thing as
service industries. There are only
industries whose service
components are greater or less
than those of other industries.
Everybody is in service.”
-Theodore Levitt-

3. What is service?
It is the part of the product or the full
product for which the customer is
willing to see value and pay for it.

4. What is service?
“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 transitory, often
intangible in nature, and does not normally
result in ownership of any of the factors of
production”.

5. What is service?
“A service is an economic activity that
creates value and provides benefits for
customers at specific times and places by
bringing about a desired change in, or on
behalf of, the recipient of the service”.

6. Characteristics of Services
1. Intangibility
-Services can not be tasted, felt, heard or smelt.
-Intangibility creates a feeling of uncertainty.
-Example: Banking services, Parlor.
The process of a company making a service
tangible should include:
a. Location and Physical Setting
-Accessible, -Planned traffic flow, -Short
waiting lines, -Attractive exterior design.

7. Characteristics of Services Cont..
b. Employees and Agents
-Sufficient in No., -Neat appearance,
Sharpness and Knowledge.
c. Hardware, Tools and Techniques
-Latest hardware
d. Communication
-Speedy

8. Characteristics of Services Cont..
2. Inseparability
-Services can not be separated from the
service providers.
-Inseparability creates problems in case of
market expansion.
-Example: Banking services, Doctors and
Patients, Waiter and Consumers

9. Characteristics of Services Cont..
3. Variability/ Heterogeneity
-Services are highly variable.
-Problem in standardizing.
Example: Experience of bus travelers,
Receptionist.
4. Perishability
-Services can not be stored.
-Creates problem when demand fluctuate.
Example: Train that leaves the Railway station

10. Characteristics of Services Cont..
5. Customer Participation
-Service production is not a one-sided
activity.
Example: Medical treatment, Hair dressing,
Health clubs, Colleges, Beauty
care centres.
6. No Ownership

11. Marketing Problems/Challenges
and Strategic Options
Service Characteristic: Intangibility
Marketing Problems:
• Can not be communicated easily.
• Consumer suspects due to absence of concrete
evidences.
• Design of total service package not possible.
• Comparative presentation is not possible.

12. Marketing Problems/Challenges
and Strategic Options Cont..
Strategic Options:
• Making the service process tangible to the
maximum possible extent.
• Managing and promoting word-of-mouth
communication.
• Strengthening internal and external
marketing.
• Use of relationship marketing.

13. Marketing Problems/Challenges
and Strategic Options Cont..
Service Characteristic: Inseparability
Marketing Problems:
• Problems of market expansion.
• Maintenance of service quality.
• Compulsory presence of consumers.
• Limited production capacity.
• Operation at limited capacity.

14. Marketing Problems/Challenges
and Strategic Options Cont..
Strategic Options:
• Minimization of customer interactions.
• Innovating techniques of indirect interaction.
• Standardization to the maximum possible
extent.
• Developing distribution network with quality
control mechanisms.

15. Marketing Problems/Challenges
and Strategic Options Cont..
Service Characteristic: Variability
Marketing Problems:
• Limited scope for standardization.
• Not possible to communicate exactly what the
consumer is going to receive.
• Quality can be determined only after the
service is consumed.

16. Marketing Problems/Challenges
and Strategic Options Cont..
Strategic Options:
• More focus on standardization.
• Internal marketing and employee training.
• Positioning variation as a strength of
innovation.
• Promote research and innovations.

17. Marketing Problems/Challenges
and Strategic Options Cont..
Service Characteristic: Perishability
Marketing Problems:
• Storage of service is not possible.
• Sales volume continuously in relation to
the capacity.
• Time pressure in sales.

18. Marketing Problems/Challenges
and Strategic Options Cont..
Strategic Options:
• Demand management.
• Capacity management.
• Tactical management.
• Continuous study on demand patterns and
competitive parameters.

19. Marketing Problems/Challenges
and Strategic Options Cont..
Service Characteristic: Customer Participation
Marketing Problems:
• Customers are not controllable.
• Production quality also depends upon
customer’s knowledge and ability to
participate.
• Customers are evaluating at every stage of
service production.

20. Marketing Problems/Challenges
and Strategic Options Cont..
Strategic Options:
• Effective external marketing.
• Customer education and training.
• Effective interactive marketing.
• Management of movements of truth.
• Effective internal marketing.

21. Marketing Problems/Challenges
and Strategic Options Cont..
Service Characteristic: No Ownership
Marketing Problems:
• Nothing remains after consumption.
• Very less time to the consumer to evaluate
the product.
• High consumer dissonance.

22. Marketing Problems/Challenges
and Strategic Options Cont..
Strategic Options:
• Making communication tangible.
• Customer relationship marketing.
• Managing high level of company image.

23. Difference between physical
goods and services
Physical goods Services
Physical goods are tangible Services are intangible
When a good is purchased, there is
something that can be seen,
touched, perhaps smelled or worn
Services can not be seen, felt, heard
or smelt before they are bought
Goods are consumed, used and
possessed. It is easy for the seller to
demonstrate or display the goods
Services are availed but not
possessed, therefore the absence of
tangible features means that it is
difficult for the seller to
demonstrate or display services and
for buyers to sample, test or make a
thorough evaluation
In goods customers do not
participate in the production
process
In service customers participate in
production process

24. Difference between physical
goods and services
Physical goods Services
In goods core value processed in
factory
In service core value produced in the
buyer-seller interaction
In physical goods production and
distribution are separated from
consumption
In services production, distribution and
consumption are simultaneous
processes
Physical goods can be kept in stock Services cannot be kept in stock
Firm is able to store or transport
physical goods
Firm is unable to store or transport
services, only direct distribution is
possible
Physical good is an object, a device, a
thing
Service is a deed, a performance, an
activity or process, an effort.

25. Difference between physical
goods and services
Physical goods Services
Transfer of ownership possible in goods No transfer of ownership in services.
Physical goods are homogeneous Services are heterogeneous
It is possible to offer consistency
and uniformity of physical goods.
Often impossible to assure
consistency in the services provided
by a seller or to standardize
offerings among sellers of the same
service