How do we define and classify services, and how do they differ from goods?

DESIGNING & MANAGING SERVICES

What is a Service?

A Service is any act or performance one party can offer to another that is essentially intangible and does not result in the ownership of anything.

5 Categories of OfferingsPure Tangible Good: e.g. Soap, Salt

Tangible Good + Accompanying Service: !e.g. Car is accompanied by services

Hybrid: e.g. Restaurant, where goods and services are equally important

Major Service + Minor goods and services: e.g. Air travel

Pure Service: e.g. Babysitting, Psychotherapy

Distinctive Characteristics of

Services

Intangibility

Services cannot be seen, tasted, felt or heard.

!

!

To reduce uncertainty, buyers look for

evidence of quality. !

!

Therefore, the service provider’s task is to

‘manage the evidence’ in order to ‘tangibilize

the intangible ’

Inseparability

Whereas physical goods are manufactured, inventoried, distributed and later consumed, services are typically produced and consumed simultaneously. !

Provider-Client interaction is a special feature of services marketing.

Variability

Since the quality of services depends on who provides them, when and where, and to whom, services are highly variable. e.g. some doctors are polite while others are less empathetic !

To increase quality control, firms can: 1) Invest in good hiring and training 2) Standardize service performance process 3) Monitor customer satisfaction

Perishability

Services cannot be stored, hence their perishability can be a problem. !

Right services must be available to the right customers at the right places at the right times at the right prices, to maximise profitability.

Created by Anngad Singh, Delhi Technological University,

during an internship by Prof. Sameer Mathur, IIM Lucknow.

www.IIMInternship.com