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http://jsr.sagepub.com/content/7/1/20The online version of this article can be found at:

DOI: 10.1177/1094670504266131

2004 7: 20Journal of Service ResearchChristopher Lovelock and Evert Gummesson

Whither Services Marketing? : In Search of a New Paradigm and Fresh Perspectives

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Whither Services Marketing?

In Search of a New Paradigm and Fresh Perspectives

Christopher LovelockYale University

Evert GummessonStockholm University

This article examines the received wisdom of services

marketing and challenges the validity and continued use-

fulness of its core paradigm, namely, the assertion that

four specific characteristicsintangibility, heterogeneity,

inseparability, and perishabilitymake services uniquely

different from goods. An alternative paradigm is pro-

posed, based on the premisethat marketingexchangesthat

do notresult ina transferof ownershipfromseller to buyer

are fundamentally different from those that do. It posits

that services offer benefits through access or temporary

possession, instead of ownership, with payments taking

the form of rentals or access fees. This rental/access per-

spective offers a different lens through which to view ser-

vices. Important implications include opportunities to

market goods in a service format; the need for more re-

search into how time is perceived, valued, and consumed;

andthenotion ofservicesasa meansof sharing resources.

Keywords: economic theory; intangibility; marketing

theory; rental services; resource sharing;

services marketing; timeconsumption; time-

based pricing; textbook theory

Is theacademic fieldof services marketing in danger oflosing its broad and in many respects coherent perspec-tive? This may seem likea strange question toask ata time

when service markets have never been larger, competitionin services has probably never been more intense, and netemployment growth within developed economies is al-most exclusively derived from services. And yet someleading scholars areconcerned about thefield. Ina broaderarena, the dominant logic of marketing is under attack byan argument that its emphasis on the provision of goods asthe basis for economic exchange should be replaced by anemphasis on the provision of service (Vargo and Lusch2004a).

A rare characteristic of service research is that it origi-nated simultaneously in several European countries andthe United States. An international dialogue developed atan early stage, although theEnglish-language literature, asin most sciences today, remains dominated by Americanviews and research. As Gummeson (2002a) noted, Euro-pean academics read U.S. journals but U.S. academicsrarely read European journals (p. 329). In a recent book,edited by Fisk, Grove, and John (2000), eight U.S.-basedand two European-based scholars (including the authorsof this article), who have been associated with the fieldsince its early days and remain active contributors, offerhistories of theevolution of services marketingand pre-

ferred directions for its future. They provide insightsthrough their varying perceptions of the past, present, andfuture of services marketing. A major lesson here is thatthere are several histories and projected futures.

Correspondence concerning this article shouldbe addressed to Christopher Lovelock,Schoolof Management, Yale University,NewHaven, CT 06520-8200; phone: (508) 240-7888; e-mail: [email protected].

Journal of Service Research, Volume 7, No. 1, August 2004 20-41DOI: 10.1177/1094670504266131 2004 Sage Publications

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In thesame spirit, this article recognizes that a key obli-gation of scholarly research is ongoing reflection and dia-logue. We acknowledge with admiration the vital contri-butions by numerous researchers over theyears. Yet, giventhe subsequent evolution of service markets, offerings,and technologies, it seems appropriate to pose the ques-

tion: If scholars were starting from scratch today to de-velop the field of services marketing, would they employthe same underlying assumptions and develop broadlysimilar conceptual frameworks?

As a first step, we examine the validity of the currentcore paradigm of services marketing, namely, the asser-tion that four specific characteristicsintangibility, heter-ogeneity, inseparability, and perishabilitymake servicesuniquely different from goods. These characteristics,which for simplicity are collectively referred to as IHIP,have been staples of service research and teaching formore than two decades. But we need to ask if they aregrounded in empirical research or are merely theoreticalconstructs that are subject to ambiguous interpretation.

Concerns Over the Future

of Services Marketing

In evaluating the evolution of services marketing,Schneider (2000) observed that organizations go into de-cline when they try to refine what makes them success-fulan assertion based on the work of Miller (1990) andKotter and Heskett (1992)and added rather glumly:

Services marketing has been successful because it

differentiated itself in the marketplace with a con-ceptual paradigm shiftservices are different fromgoods. All else has followed from this conceptualleapand with increasing refinement. We have hada happy 20 year run . . . but we may need some newenergy and new directions. . . . I sense a kind of mal-aise in services marketing. (p. 180)

Berry (2000) expressed concern that the dominance ofa single area of researchone in which he himself mademajor contributionshas effectively blocked progress inother areas.

During most of the 1990s, the field became toocaughtup inservice quality measurement anddebat-ing the pros and cons of alternative methodolo-gies. . . . So much research energy and journal spacewas devoted to this subject matter that the fieldseemed to lose its bearings. (p. 10)

Perhaps reinforcing thedriftto which Schneider (2000)and Berry (2000) referred was the emergence during thelate 1990s of theInternet as an importantbusiness tool andthe resulting explosion of interest in e-commerce. Internet

technology offers the potential for creating new businessmodels, radical new approaches to delivering informa-tion-based services,andnew ways of relating tocustomers(Peterson, Balasubramanian, and Bronnenberg 1997;Reichheld and Schefter 2000; Rust and Kannan 2002).

Some scholars have expressed concern that existing

service concepts are not readily applicable to Internet ser-vices. Brown (2000) argued that the ability to obtain andconsume services without interacting with a human pro-vider challenges much of our existingknowledge (p. 62).Reinforcing this viewpoint, D. E. Bowen (2000) con-cluded, It now seems that most of what we know aboutservices marketing and management has been derivedfrom the study of face-to-face service encounters or atleast over the telephone (p. 46).

In a subsequent review and commentary, Grove, Fisk,and John (2003) observed,

Services marketing now faces a challenge that con-

fronts many maturing fields of study. Specifically,as the domain of services has expanded, the bound-aries that define it have become more obscure. Fur-ther, like so many other evolving disciplines, thedirection in which services marketing is headed isunclear. Issues regarding the scope and the future ofservices persist. In short, as the field has grown, ithas becomemore diffuse. A basic question nowfac-ing the services marketing subdiscipline is wheredo we go from here? (p. 106)

The Power of Paradigms

As clarified by Kuhn (1970), progress in any scientificfield requires a paradigm, which he conceives as a funda-mental set of assumptions that is shared by members of aparticular scientific community. A paradigm shapes theformulation of theoretical generalizations, focuses datagathering, and influences the selection of researchprocedures and projects.

Although paradigms can facilitate research and gener-ate axioms that are useful for both teaching and practice,they are only temporary postulates, and the validity of theunderlying assumptions must always be open to chal-lenge. We should be mindful of Schumpeters (1950) fa-mous treatise on entrepreneurship and the drivers of

development demanding creative destruction through in-novation. Such a perspective seems applicable to theorydevelopment as well. For this reason, we argue that it isdesirable to open a dialogue on paradigmatic issues.

The Received Wisdom of Textbooks

Howdoes themarketing discipline as a whole view ser-vices? A case can be made that the received wisdom ofmarketing is perhaps best captured in mainstream text-

Lovelock, Gummesson / WHITHER SERVICES MARKETING? 21



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books employed for required courses in the field. Asscholars, we should be concerned about how mainstreamtextspresentourfield,becausethiscontentwillbeasmuchas most people ever learn about it. With few exceptions,courses in services marketing are taught as electives atboth undergraduate and graduate levels. However, most

business schools require all students to take an introduc-tory course in marketing, in which treatment of servicesmarketing is necessarily limitedif, indeed, it is coveredat all. Hence, we can infer that only a fraction of all stu-dents areactuallyexposedto in-depthcoverageof servicesmarketing.

Although services dominate developed economies,textbook theory treats services marketing as a subdisci-pline of manufacturing-based marketing management.Gummesson (2002a, pp. 325-26) noted that marketingtextbooks offer a smorgasbord of dishes but laments thatthe smorgasbord text often offers minuscule context. Newtheoriesandconceptstendtobepresentedasaspecialcaseand an add-on. Developing general marketing theory re-quireseitherintegration of new lessons at a higherconcep-tual level than the theory already in existence or, moreradically, a change in its very foundations.

As argued by Schneider (2000), the underlying para-digm in services marketing since the 1980s has been thatservices are different from goods, a claimsupported by anin-depth literature review by Fisk, Brown, and Bitner(1993), who concluded that [four] featuresintangibil-ity, inseparability, heterogeneity, and perishabilitypro-vided the underpinnings for the case that servicesmarketingis a fielddistinctfromgoods marketing (p.68).

In reviewing introductory marketingmanagement textsrecently published in the United States, we identified fourestablished textbooksdefined as being in their third orlater editionthat contained an entire chapter devoted toservices (Kerin et al. 2003; Kotler 2003; Pride and Ferrell2003; Solomon and Stuart 2003). In each instance, the au-thors attribute specific characteristics to services that im-plicitly or explicitly differentiate them from physicalgoods (see Table 1). Despite differences in both sequenc-ing and terminology (notably Kerin et als alliterative ef-fort to create the Four Is of services and Kotlers andSolomon andStuarts useof the term variability instead ofheterogeneity), each text essentially discusses the four

IHIP characteristics. Pride and Ferrell claim two more:client-based relationships and customer contact.

As evidenced by the content of these widely used text-books, we conclude that the paradigm that services differfromgoods, reflectingthe basic/major/uniqueIHIPcharacteristics, constitutes todays received wisdom in thebroader academic marketing community. However, with-out empirical evidence, we cannot conclude that practic-ing managers either accept or act upon this paradigm.

Texts in services marketing are, of course, directed at amuch smaller and more focused market than introductorymarketing texts. Although services marketing texts agreethat services differ from goods, they display less unanim-ity in theirdepictionof specificdistinguishingcharacteris-tics. Among texts published between 1998 and 2004, five(Fisk, Grove,andJohn 2004; Kasper, van Helsdingen, andde Vries 1999; Kurtz and Clow 1998; Hoffman and

Bateson 2001; Zeithaml and Bitner 2003) build their dis-cussion of differences around the IHIP characteristics.However, five other texts (Bateson and Hoffman 1999;Grnroos 2000; Gonalves 1998; Lovelock and Wirtz2004;Lovelockand Wright 2002)enumeratesignificantlylonger lists of differences between goods and services.Books in the latter group do not always include all fourIHIP characteristics. This situation supports Grove, Fisk,and Johns (2003) contention that the field has becomemore diffuse.

DEVELOPMENT OF THE GOODS

VERSUS SERVICES PARADIGM

During the 1970s and early 1980s, service researchers(primarily marketers but also specialists in operations andhuman resources) put forward a broadly similar message.Services, they argued, raised distinctive managementchallenges that were not being addressed by existing re-search and teaching grounded in manufacturing and ag-ricultural production, whose physical output was col-

22 JOURNAL OF SERVICE RESEARCH / August 2004

TABLE 1How Introductory Marketing Management

Texts Portray Service Characteristics

Statement of Service

Authors Characteristics (direct quotes)

Kerin et al. (2003, p. 323) There are four unique elements toservices: intangibility, inconsistency,inseparability, and inventory

Kotler (2003, p. 446) Services have four major characteristicsthat greatly affect the design ofmarketing programs: Intangibility,inseparability, variability, andperishability

Pride and Ferrell(2003, p. 325)

Services have six basic characteristics:intangibility, inseparability ofproduction and consumption,perishability, heterogeneity, client-based relationships, and customercontact

Solomon and Stuart(2003)

Regardless of whether they affect ourbodies or our possessions, all services

share four characteristics:intangibility, perishability,inseparability, and variability



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lecively referred to as goods. (For detailed literaturereviews, see Berry and Parasuraman 1993; Fisk, Brown,and Bitner 1993.)

During that era, the prevailing marketing theory, whichclaimed to be generalizable, rested mainly on a business-to-consumer (B2C) depiction of market transactions in

physical goods, with business-to-business (B2B) market-ing presented as a special case (Bartels 1976). Serviceswere rarely discussed, except in relation to transportationof goods through physical channels, repair and mainte-nance of products, and provision of customer service aspart of the augmented product (LaLonde and Zinszer1976; Rakowski 1982).

Academics who were interested in how services werecreated, designed, delivered, andmarketedfoundthatpub-lished insights and practical examples were in short sup-ply. In these circumstances, it is not surprising that manymarketing scholars fell back on their own experiences ascustomers of airlines, banks, hotels, restaurants, and retailstores. Fisk, Brown, andBitner (1993) noted that littleem-pirical research on services was published during the1970s;instead, scholarly efforts focused on conceptualization.

Apart from early discussion of professional services(Gummesson 1981; Wilson1972) anda few caseson high-profile firms likeFederal Express, relatively little attentionwaspaid to B2Bservices.Thisexperience-based approachto servicesmadeearly conceptualization unusually consumer-centric, emphasizing individual needs, customer satisfac-tion, and involvement in service encounters (Czepiel, Sol-omon, and Surprenant 1985).

Advocacy for the new field did not go unchallenged

(Enis and Roering 1981; Wyckham, Fitzroy, and Mandrey1975). However, most of the opposing arguments took theform of internal debates within academic institutionswhere service pioneers often encountered resistance fromestablished colleagues committed to the status quo (Berryand Parasuraman 1993; Fisk, Brown, and Bitner 1993).Nevertheless, a consensus emerged that (a) servicesbroadly defined as acts, deeds, performances, or effortshad different characteristics from goodsdefined as arti-cles, devices, materials, objects, or things (Berry 1980;Rathmell 1966); (b) these characteristics posed vexingmarketingproblems not faced by goods marketers; and (c)developing marketing strategies to address theseproblems

based on knowledge accumulated from goods marketingwas often insufficient and even inappropriate (Zeithaml,Parasuraman, and Berry 1985).

Evaluating the Four UniqueCharacteristics of Services

Scholars conceptualizeda varietyof characteristics thatwere believed to distinguish services from goods. In a re-view of 46 publications by 33 authors during the period

1963-83, Zeithaml, Parasuraman, and Berry (1985) deter-mined that the most frequently cited characteristics wereintangibility(mentioned by all),inseparabilityof produc-tion and consumption or simultaneity (cited by the greatmajority),heterogeneityor nonstandardization (noted byabout 70%), andperishability or inability to inventory

(cited by just more than half of the authors).The earliest author cited in this review was Regan

(1963), who identified intangibility, inseparability,perishability, and ubiquity but, rather surprisingly, neitherdefined nor explained them. However, in a still earlierwork, Parker (1960, p. 33) declared the two most impor-tant characteristics were intangibility and perishability.The first authors to cite all four characteristics (and onlythese four) were Sasser, Olson, and Wyckoff (1978), whopresented them in a pioneering service operations text-book; they used the termsimultaneityrather thaninsepa-rability.

Although many subsequent authors citing IHIP havereferenced Zeithaml, Parasuraman, and Berry (1985) asthe source, it is important to emphasize that this distin-guished trio of researchers did not invent IHIP but simplyratified it on the basis of an extensive literature review,conducted as a preliminary input to an empirical study(which we discuss below). An even more detailed reviewby Edgett and Parkinson (1993), covering 106 publica-tionsduring the period 1963-1990, yielded similar results.Thesereviewseffectivelyenshrinedthefourunique char-acteristics of services as received wisdom. However, inthe process, other, less frequently cited characteristicswere largely overlooked, most notably theabsence of

ownership in service purchases (Judd 1964; Rathmell1966, 1974).Theextensivesetof publications referenced in these re-

views confirms that individual components of the IHIPframework were widely used by scholars as organizingconcepts for the young field. Two important root sourcesthat were frequently referenced in subsequent literaturewere Rathmell (1974) and Shostack (1977). But in neitherinstance do theirconclusions about service characteristicsappeartobebasedonempiricalresearchortobuildonpastfoundations in the marketing literature, although one mayinfer that both authors were well exposed tobusiness prac-tice. In fact, Shostack was a bank executive, not an aca-

demic. Her much-cited article, Breaking Free FromProduct Marketing, was extremely influential in acceler-ating the early development of services marketing but isnoteworthy for containing only six references. A similarphenomenon can be observed in an influential article byKotler and Levy (1969) that argued for broadening theconcept of marketing to include the activities of nonbusi-ness organizations; this article contained only four refer-ences. Both articles built on syntheses derived from theauthors interpretations of received theory and inductive



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observation. By definition, a new paradigm is based onnew fundamentals instead of using a stream of existingtheory and research as its primary foundation.

In discussing scientific method, S. D. Hunt (1976, pp.16-20) drewa distinction between discovery andjustifica-tion. Discovery can originate through observation (a vari-

ant of the inductivist route) and speculation (a generalizeddeductivist route), as well as through serendipity in theform of dreams and Eureka!-like events. At some point,however, thegeneralizations that emerge need to be testedthrough empirical research in the context of justification.New theorycanalso develop from new interpretations andinnovative combinations of extant theory (Gummessonforthcoming). Hence, discovery and testing need not con-stitute two distinct stagesbut canbe a continuous, iterativetrial-and-error process in which we keep interpreting andcombining both old and new data with the purpose of im-proving validity. Knowledge management is centered onthe release of tacit knowledge, knowledge sharing, andongoing dialogues (Nonaka and Takeuchi 1995).

However, we have found no evidence that the IHIPcharacteristics have beenvalidated by researchas beingei-ther generalizable to more than limited service situationsor having collective relevance for understanding howcompanies design and implement their marketing strate-gies or how customers make choices.

In the study noted earlier, Zeithaml, Parasuraman, andBerry (1985) identified eight specificmarketing problemsassociated with each of the IHIP characteristics and thenconducted a mail survey of 1,000 managers across a widearray of service industries to determine their views on

these specific problems. Although 47% of the323respon-dents viewed demand fluctuation as a problem (one that isexacerbated by perishability), the proportion agreeing thateach of the remaining seven items presented difficultiesfor their firms ranged from a modest 23% to a mere 9%.Seeking to explain these findings, Zeithaml et al. couldonly hypothesize that the responding firms might have al-ready internalized the stated problems and were success-fully dealing with them. Perhaps these authors mostsignificant conclusion was that important differences ex-ist among service firms, notjust between service firmsandgoods firms (p. 43). In particular, they noted a wide dis-persion among responding firmsin theneed for customers

to be present during service production. Although the au-thors did not say so specifically, this latter findingimplicitly challenges the notion of inseparability ofproduction and consumption.

TRACING THE IHIP CHARACTERISTICSTO THEIR CONCEPTUAL ROOTS

Where did the IHIP characteristics come from? Ouranalysis of numerous publications by service marketing

and operations scholars during the 1970s and early 1980sreveals very few citations of references predating the1960s. Nevertheless, the concepts of intangibility, insepa-rability, heterogeneity, and perishability actually origi-nated in classical and neoclassical economics.

Origins of the Intangibility,Inseparability, and Perishability Concepts

Neither marketersnor operations specialists created thedistinction between tangible goods and intangible ser-vices. As we will show, the notions of intangibility (or im-materiality), inseparability (or simultaneity of productionand consumption), and perishability (with its implicationsof inability to inventory service output) were all derivedfrom early economic thought. More important, all threewere closely interwoven from the outset. The discussionthat follows is closely based on the literature reviews ofDelaunay and Gadrey (1992), T. P. Hill (1977), and P. Hill

(1999).Debate on the distinction between goods and services

originated with Adam Smith. Classical economists pos-ited that goods (initially referred to as commodities)must be entities over which ownership rights could be es-tablished and exchanged. In hisWealth of Nations, Smith(1776/1969) distinguished between the output of produc-tive labor, which can be stored in inventories of vendiblegoods that can subsequently be exchanged for other itemsof value, and unproductive labor that however honour-able, . . . useful, or . . . necessary . . . produces nothing forwhich an equal quantity of service can afterwards be pro-cured. . . . [This type of] work . . . perishes in the veryinstant of its production.

Early discussion of services took place in a philosophi-cal context that emphasized the importance of capital(which translated into wealth) and capital formation.Ownership of goods represented wealth. Describing ser-vice providers as unproductive was provocative, butSmith was not implying that the perishable output of gov-ernment officials, thearmedforces, clergy, lawyers,physi-cians, menof letters, musicians, entertainers, or menialservants actually failed to create valued benefits.

Writing in French, Say(1803/1964) wasthe firstto em-ploy the term immatriel (immaterial or intangible) and to

introduce the concept of simultaneity. He used the exam-pleofaphysicianwhovisitsapatient,prescribesaremedy,andthen leaves without depositing anyproduct:The phy-sicians advice has been exchanged for his fee. . . . The actof giving was its production, of hearing [by the invalid] itsconsumption, and the production and consumption weresimultaneous. This is what I call an immaterial product(cited in P. Hill 1999, p. 430).

Peter Hill (1999) characterizes Says choiceof the termimmaterial as unfortunate and draws attention to a foot-




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note in which theFrencheconomistadmits that his firstin-tention was to use the termperishableproduct, but that hediscarded this on the grounds that certain physical com-modities were also perishable. Other adjectives that heconsidered and rejected were intransferable, transient,andmomentary. We might also argue that it was unfortu-

nate that Say should have restricted his definition ofcon-sumptionto the act of hearing the physicians advice andthus implicitly excluded the patients subsequent actionsin following that advice.

The challenge of selecting an appropriate label for anew concept is one that faces scholars in all disciplines.Unfortunately, an infelicitous or inappropriate choice ofterminology may cause problems for future generaliza-tions of researchers when it results in alternative inter-pretations and meanings.

During thenineteenthcentury, the terms material prod-uctsandimmaterial products became well entrenched.Marshall (1890/1962) introduced the termgoods into gen-eral economic usage, replacing the older term,commodi-ties. Karl Marx treated activities such as transportation ofmerchandise andrepairand maintenance operations notasservices but as part of merchandise production (Delaunayand Gadrey 1992, pp. 49-51). In time, other economistsbegan representing services such as freight transportationand the distributive trades as extensions or continuationsof the process of producing material goods, because theyadded to the value in exchange of the final product.

By the mid-20th century, most economistswith theexception of some in socialist countriestended to dis-miss the distinction between productive and unproductive

labor as irrelevant and obsolete. In particular, they came tosee the ultimate end of economic activity as consumptionrather than capital formation, thereby validating the eco-nomic contribution of services that could be sold at a pricebecause they offered consumers value in use. Yet few per-ceived the distinction between material goods and imma-terial services as having any great economic significance.Peter Hill (1999), himself an economist, cautions that

the economics literature is full of statements to theeffect that goods are material, or tangible, whereasservices are immaterial, or intangible. Such state-ments are casual or conventional, rather than scien-

tific, as the nature of an immaterial product is notexplained. (p. 426)

Origins of Heterogeneity

Unlike the other three IHIP characteristics, the conceptof product heterogeneity (also referred to as variability, in-consistency, or nonstandardization) is of 20th-century ori-gin. It was introduced by Robinson (1933, 1969) in her

discussion of the distinction between perfect and im-perfect competition, and elaborated by Chamberlin(1933/1962) in the context of both natural and planneddifferentiation of commodities.

Early service scholars focused on the need for stan-dardization of work procedures, service technologies, and

self-service in order to routinize service operations andmake service faster, cheaper, and more convenient (Judd1968; Rathmell 1966). In some of the subsequent servicesliterature, the termheterogeneity wasalso used to describean entirely separate phenomenon, the extreme diversity ofservice establishments and their operations (Rathmell1974, pp. 8-9; Riddle 1986, p. 8; Shelp 1981, pp. 2-3). Inhindsight, it would have been betterif service scholars hadsettled on the termvariability, which operations special-ists often see as a key difference between manufacturingand service operations (Morris and Johnson 1987).

ARE THE IHIP CHARACTERISTICSTRULY GENERALIZABLE?

Despite an undercurrent of skepticism about the com-ponent elements (Grnroos 2000; Lovelock 1983, 2000)and a highly critical stance by Gummesson (2002b, pp.288-89), theIHIP framework remains a unifying themefor ser-vices marketing. It continues to be presented as receivedwisdom in chapters on services marketing in introductorymarketing texts (Table 1) and with varying degrees of cer-titude in several, but not all, specialized services market-ing texts. However, as we willdemonstrate, theframeworkhas serious weaknesses as a generalizable underpinningfor the paradigm that services are different from goods.We examine each characteristic in turn.

Intangibility

Intangibility is not only the most widely cited differ-ence between goods and services but has also been de-scribed by Bateson (1979) as the critical distinction fromwhich all other differences emerge. Bateson drew a dis-tinction betweenphysical intangibility, that which is im-palpable or cannot be touched, andmental intangibility,that which cannot be grasped mentally, and concluded,

The crucial point about services is that they aredoubly in-tangible (p. 139). Later, McDougall and Snetsinger(1990) sought to operationalize mental intangibility asthe degree to which a product can be visualized and pro-vide a clear and concrete imagebefore purchase [italicsadded].

Laroche, Bergeron, and Goutaland (2001) argued thatintangibility includes a thirddimension, generality (whichencompasses the notions of accessibility versus inaccessi-




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bility to the senses, abstractness versus concreteness, andgenerality versus specificity) and developed a scale formeasuring all three dimensions. However, on the basis oftwo subsequent empirical studies, Bielen and Sempels(2003, p. 12) confirmed Batesons original conceptualiza-tion and concluded that intangibility is a bidimensional

concept comprising (a) a physical dimension specific tothe degree of materiality of the product or service studiedand (b) a mental dimension tied to the degree of difficultyinvolved in defining, formulating, or understanding in aclear and precise fashion the product or service inquestion.

Nevertheless, the received wisdom presented today inintroductory marketing textbooks fails to makean explicitdistinction between physical and mental intangibility.Pride and Ferrell (2003) stated simply that intangibilitymeansthataserviceisnotphysicalandthereforecannotbetouched . . . or physically possessed (p. 324). The otherthree texts present physical intangibility as aprepurchasephenomenon that results in uncertainty and difficulty ofevaluation. Kotler (2003) stated that unlike physicalgoods, services cannot be seen, tasted, heard, felt, orsmelled before purchase and then linked this point to theneed to reduce prepurchase uncertainty (p. 446). Kerinet al (2003) stated that services cant be held, touched, orseen before thepurchasedecisionandare thus more diffi-cult to evaluate (p. 323). Solomon and Stuart (2003) madethe same point.

Of course, we canarguethat thesame prepurchase phe-nomenon happens to be true of numerous manufacturedproducts, including foodstuffs, cosmetics, medicines, and

audio or video recordings, whose sensory stimuli areoftenhidden within protective packaging,making it possible foronlythemostseasonedbuyerstofullyevaluatetheminad-vance of actual use. The growth of telephone ordering, e-commerce, and build-to-order products further insulatesbuyers frommerchandise in advanceof delivery. Yet manyservices involving delivery of tangible elements can beevaluated before use. For instance, the core product in ahotel or motel isthe room. Travelers can check out hotel ormotel rooms before registering and mayeven decide to tryanother facility if they do not like the look of the facilities,the appearance and attitude of the staff, or even the feel ofthe bed.

Eva luating physical intangibil ity. To determinewhether or not services are intangible, we have to go be-yond prepurchase issues and consider delivery processes,consumption behavior, and observable outcomes. It haslong been recognized that there is an important interde-pendence between services and goods, with most servicesrequiring physical goods to support and facilitate the de-liverysystem (Greenfield 2002;Rathmell1974). Shostack

(1977) implied that there are very few pure goods or pureservices; instead, shenotes most marketentities arecom-binationsof discrete elementswhich are linkedtogether inmolecule-like wholes. Elements can be either tangible orintangible. The entity may have either a tangible or intan-gible nucleus (p. 75). She proposes that products may be

arrayed on a tangibility spectrum according to whether theirconstituent elements are collectively tangible-dominant orintangible-dominant. The notion of the augmented prod-uct applies to both goods and services and often includessupplementary service elements that enhance or facilitatethe core element (Grnroos 2000; Lovelock and Wirtz2004).

Received wisdom endorses Shostacks perspective.Three of the four marketing management texts cited ear-lier (Kerin et al. 2003; Pride and Ferrell 2003; SolomonandStuart2003) contain figures that present derivatives ofher tangibility spectrum and suggest that products definedas goods are arrayed on the tangible-dominant half of thespectrum and products defined as services on the intangible-dominant half. Although pure goods and pure services lieat the extremities, most other items are presented as con-taining a mix of tangible and intangible elements.

Further support for the tangible nature of service expe-riences comes from research by Zeithaml, Parasuraman,and Berry (1990) who identified tangibles (the appear-ance of physical facilities, equipment, personnel, andcommunication materials) as one of five key dimensionsof servicequality. An importantconcept relatingto servicetangibility is theservicescape, which recognizes that ser-vice experiences are surrounded and shaped by a built en-

vironment incorporating ambience, function, and designin addition to a social environment comprising serviceproviders and other customers (Bitner 1992, 2000).

Bitner (1992) emphasized the importance of managingthe physical aspects of the servicescape as (a) a sensory

packagedesigned toelicitemotional responses; (b)afacil-itatorto shape customer behavior and enable efficientflow of activities; and (c) adifferentiatorto distinguish aservice provider from its competitors, signal the intendedmarket segments at which the service is targeted, and dif-ferentiate higher priced offerings from less expensiveones. Customersmay bespecificallyattracted toan expen-sive service by the availability of superior tangible ele-

ments, such as a more elegant and better equipped hotelroom, a larger airline seat that folds into a bed, or a chiro-practor recognized for her ability to achievedesired resultsfor patients through skilled manipulation of the spinalcolumn.

By contrast, the development of Internet-based self-service delivery in categories such as banking, insurance,news, research, weather forecasting, and software pro-vides a whole new setof highly intangible services limited




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to images on a screen (and perhaps sounds). The growingavailability of such services sharpens our recognition ofjust how much physical tangibility exists in most otherservices.

Evaluating mental intangibility. Zeithaml (1981)

claimed that three characteristics of services[physical]intangibility, inseparability, and nonstandardization (het-erogeneity)make it moredifficult for consumers to eval-uate services than goods. Employing Nelsons (1970) andDarby and Karnis (1973) classification of the qualities ofgoods,shearguedthatmanygoodsarehighin search qual-itiesattributes that can be determined and evaluatedprior to purchase. Other goods andmany services arehighinexperiencequalities, because their attributes cannot beknown or assessed until they have been purchased and arebeing consumed. Finally, there are productsmostly ser-vicesthat are high incredencequalities that customersmust take on faith because they are hard to evaluate even

after consumption. She hypothesized that products can bearrayed on a spectrum, with most goods falling to the leftof the spectrum (easier to evaluate) and most services tothe right (harder to evaluate).

All four of thepreviously cited marketingmanagementtexts discuss thisclassification and itsapplication to goodsand services, subscribing to the notion that goods are eas-ier to evaluate than services. But one troubling aspect ofmental intangibility, as portrayed in the service literature,is that no provision is made for learning effects. We havefound no empirical evidence that the difficulty of makingprepurchase evaluations persists as experience is builtthrough frequent use. Moreover, even if we accept that

many services are difficult for first-time users to evaluate,the same may also be true for many goods. In short, theredoes not appear to be anygeneralizableempirical evi-dence that goods are easier to evaluate than services on anongoing basis.

Insights from empirical research. Laroche, Bergeron,and Goutaland (2001) provided empirical support forShostacks notion of a tangibility-intangibility spectrum.They asked respondents to rate six product categories,composed of three goods (jeans, a computer, and a com-pact disk) and three services (a pizzeria dinner, a haircut,and a checking account) on a set of 9-point Likert-type

scales measuring physical intangibility, mental intangibil-ity, and third construct they calledgenerality. The findingsshowed a different sequencing of the ratings for the sixproducts on physical and mental intangibility, clearly indi-cating that consumers do not necessarily view all goods asmore physically and mentally tangible than all servicesand vice versa. In particular, the results showed that al-thougha haircut wasviewedas combininga roughly equal

mix of physical tangibility and intangibility, it was clearlypositioned in consumers minds as mentally tangible.

Conclusion.Forsuchacentraltenetofservicesmarket-ing, intangibility emerges as an ambiguous and surpris-ingly limited concept. It appears tobe primarilyassociated

with prepurchase activities where customershave no priorexperience with theservice in questiona situationthat isequally valid for some goods. Many services involve tan-gible performance activities that users experience duringdelivery through one or more of their five senses. In fact,for services such as surgery, haircuts, health clubs, clean-ing, repair, or landscaping, customerskey goals are to ob-tain tangible changes in themselves or their possessions.The tangible outcomes of such changesa feeling ofphysical well-being following a massage, a clean office, asporty new haircut, a newly mowed lawn, or restored mo-bility following hip replacement surgerywill rangefrom ephemeral to permanent and irreversible.

The degree of mental intangibility inherent in a serviceis not necessarily correlated with physical intangibility. Ahigh labor content does not necessarily render a servicephysically intangible. In fact, therole of contact personnelin many service environments is to help bring about aphysical change in customers themselves or in their pos-sessions. Although the concept of intangibility mightsometimes remain usefulfor example, in relation to thegrowing number of e-serviceswe conclude that it is nota universally applicable characteristic of all services dur-ing all stages from prepurchase through delivery, con-sumption, and output. The concept has been cited for itsvalue in developing advertising themes (George and Berry

1981; Mittal and Baker 2002; Shostack 1977), but its im-plications for other aspects of marketing strategy remainunclear. In particular, when considering service output,marketers should be careful not to confuse intangibilitywith perishability.

Heterogeneity

The problem of variability has attracted attention fromservice researchers in both marketing and operations, pri-marily in relation to the difficulty of achieving uniformoutput, especially in labor-intensive services. Sasser,

Olsen, and Wyckoff (1978) described the challenge of es-tablishingstandards when behavior and performance varynot only among service workers but even between thesame employees interactions from one customer to an-other and from one day to another. But Rathmell (1974)explicitly recognized that performance variability wasmuch less problematic in machine-intensive service in-dustries and that performance standards would becomeeasier to attain as more services converted from human-




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intensive to machine-intensive operations. Levitt (1972)argued for industrialization of service operations, high-lighting theuseof equipment, procedures, and technologyto remove humandiscretionand eliminatephysicalfactorsthat caused variations in delivery.

Eiglier and Langeard (1975, 1977) noted the difficulty

of controlling servicequality when customers are activelyinvolved in the production process. Morris and Johnston(1987) contrasted materials processing (manufacturing)and customer processing (service) operations, pointing tothe variability in services of both the transforming re-sources and the transformed input (customers).

Although thecase forheterogeneity in services isbasedprimarily on variations in worker performance, Zeithamland Bitner (2003) noted that no two customers are pre-cisely alike and thus will have unique demands or experi-ence the service in a unique way. As additional factorscreating variability in service performance, Desmet, VanLooy, and Van Dierdonck (1998) cited the presence andbehavior of other customers during service delivery andvariations in external conditionsweather, crowding, anddifferences between service locations.

However, we need to distinguish between variations inthe consistency of service delivery that result from cus-tomer interactions with the service operation (a phenome-non derived from the characteristic of inseparability) andvariations in customer perceptions of service experiences.Thelatteris notunique to services,because customersex-pectations of, and experiences with, physical goods canalso vary widely. Similarly, the notion of variability be-tween customers is not unique to services and is embodied

in relationship marketing, customer relationship manage-ment (CRM), and one-to-one marketing (Copulsky andWolf 1990; Grnroos 2000; Gummesson 2002b; Peppersand Rogers 1999 ). Such customization strategies are asrelevant to manufactured products as to services in bothB2BandB2Ccontexts. Just as in consumer goods market-ing there may be opportunities for product differentiationthrough mass customization (Pine 1993), researchsuggests a trend towardcustomizationof services (Sundbo2002).

What is thereceived wisdomon heterogeneity? Amongmarketing management text authors, only Pride andFerrell (2003) employed the term heterogeneity. Kotler

(2003) andSolomon andStuart (2003) both used themoreappropriate term,variability, whereas Kerin et al. (2003)employedinconsistency. All four texts link variability tohuman involvement in service deliveryand resulting qual-ity problems. Pride and Ferrell emphasize that heteroge-neity usually increasesas thedegree of labor intensivenessincreases. . . . Equipment-based services, in contrast, suf-fer from this problem to a lesser degree (p. 326). But itmay not be a negative. Solomon and Stuart note that stan-

dardization is not even desirable for many services andthat individuals often appreciate customization to meettheir specific needs.

The service literature makes frequent use of the stan-dardization/nonstandardization dichotomy. Yet this repre-sents an incomplete depiction of the issue. A better

conceptualization, derived from manufacturing, is stan-dardization, modularization, and customization.Manyso-called standardized services, from banking to transporta-tion, actually represent a strategy of mass customization(Pine 1993), in which customers make selections from avariety of modules (standardized in themselves) to createthe service package that best suits their needs. For exam-ple, scheduled airline service is highly standardized in de-signbutoffers modules for customizing specificelements,such as alternative schedules; service to or from differentairports in the same metropolitan area; different classesand prices; seat location; and a selection of drinks, food,and other amenities. Actual execution, of course, isvariable.

Conclusion. Althoughthere appearstobea consensus thatvariability is an inherent characteristic of labor-intensiveservices, no such claim is made for machine-intensive ser-vice operations. During the past two decades, there hasbeen a significant trend toward replacinglabor by automa-tion to improve productivity and achieve standardizationin service delivery, thus making variability less of a prob-lem than previously. In manufacturing industries, despiteefforts to improve physical product quality, variability isevidenced by consumer complaint data, product recalls,and negative product evaluations from testing organiza-

tions such as the Consumers Union. Variability also re-mains an ongoing problem for food and other productssubject to rapid physical deterioration.

Even if we agree to replace theunfortunate term hetero-geneityby themore relevantoneofvariability, betterqual-ity control procedures, standardization of modules, andthe trend toward automation mean that many services areno longer highly variable in terms of technicalquality. Weconclude that it is inappropriate to continue to generalizeabout heterogeneity (or variability) as being a distinctivecharacteristic that sets all services apart from all goods.

Inseparability

Inseparability of production and consumption is linkedto the concepts of interaction and the service encounter(Czepiel, Solomon, and Surprenant 1985). The latter con-cept was dramatically illustrated by the 50 million mo-ments of truth per year that Scandinavian Airlines (SAS)stressed in their pioneering and service-focused turn-around in theearly 1980s (Carlzon 1987). A simultaneousproduction and consumption process involving such fac-




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tors as thepresence of thecustomer, thecustomers role ascoproducer, customer-to-employee, and customer-to-customer interactions is readily observable in many ser-vice environments and can form a critical distinguishingproperty between goods and many types of services.

Although, as Prahalad (2004) recognized, there are

multiple approaches to customer engagement, we use thetermcoproducerhere in the narrow sense of a transfer ofwork from the provider to the customer. The literature oncoproduction (Benapudi and Leone 2003; Bitner et al.1997; Edvardsson et al. 2000; Firat, Dholakia, andVenkatesh 1995; Namisvayam 2003) highlights the pro-ductivity benefitsas well as themanagerial challenges thatarise when customers become partial employees. In itspurest form, coproductionmeans that customersengage inself-service, using systems, facilities, or equipment sup-plied by the service provider. Bateson (1985), Lovelockand Young (1979), and Meuter et al. 2000) offer compel-ling evidenceof thevalueof this approach to service deliv-ery, the differing forms it can take, and the role oftechnology.

Separable services. Despite theinseparabilityclaimforservices, there is a large group ofseparableservices thatdo not involve the customer directly, with the result thatproduction and consumption need not be simultaneous.Simple observation will show that numerous widely usedbusiness and consumer services delivered to customersphysical possessionssuch as transporting freight, laun-dering clothes, and undertaking routine cleaning andmaintenance on a wide array of equipmentandfacilitiesare most commonly performed in the customers absence.

The same is true of many government services such asdefense and maintenance of infrastructure.

Consumers purchase such services as laundry and drycleaning, oil changes for their cars, lawn care, and parceldeliverypreciselyto avoid having to involve themselves inthesetasks.Theyarewillingtopaymoneytosavetimeandeffort and to allow a professional to do the joboften per-ceived as an unpleasant onebetter than they could them-selves. Dropping off an item at a retail repair site or givinginstructions to a provider of lawn care services does notconstitute involvement in actual production of the coreservice activity.

Similarly, corporate customers outsource such repeti-tive tasks as freight transportation, payroll administration,landscaping, and office cleaning precisely in order to dis-engage from performance of these activities. In somecases, the tasks are performed at a different physical loca-tion; in others (such as office cleaning or building repairs),they may be deliberately scheduled at night or weekendswhen hardly anyone is around. Although there may besome initial collaboration between the customer and the

service provider, once theoutsourced operation is runningsmoothly, there is usually little reason for the customer toremain engaged in the production process.

In many separable services, there is an inevitable de-coupling of production and consumption. Consider clean-ing, repair, and maintenance services, whereconsumption

of the benefits can only take place after the customer re-claims the item, typically some time after production hasbeen completed. In a few instances, consumption of bene-fits actually precedes production, as in banking when acustomer pays a bill by writing a check that may not beprocessed until several days later.

Conclusion. Simultaneity of production and consump-tion is a distinctive characteristic for inseparable services,with important implications for marketing and operationsstrategy, including the role played by customers. As such,it is a very important concept. However, we conclude thattherearefartoomanyseparableservicestojustifythegen-

eralization that inseparability is a distinctive characteristicof all services.

Perishability

Therearemultipleperspectives on themeaningandim-plicationsof perishability, and consequently, the literatureon this topic embraces several strands. What, then, is thereceivedwisdom?A commonclaimis that services cannotbe saved, storedfor reuse at a later date, resold, or returned(Edgett and Parkinson 1993; Zeithaml and Bitner 2003).Kotler (2003, p. 449) statedsimply that services cannot bestored, and Solomon and Stewart (2003) concurred. Pride

and Ferrell (2003) declared that the unused service ca-pacity of one time period cannot be stored for future use(p. 325), and Fitzsimmons and Fitzsimmons (1998) spe-cifically stressed the time dependency. If demand is low,unused capacity is wasted. If demand exceeds capacity, itgoes unfulfilled and business may be lost. Bringing de-mand and supply into balance requires management ofboth demand and available capacity (Lovelock 1984;Sasser 1976).

Kerin et al. (2003) took a slightly different perspective.Using the heading Inventory rather than Perishability,they argued that inventory of services is differentfrom that

of goods: Inventory problems exist with goods becausemany items are perishable and because there are costs as-sociated with handling inventory. With services, inven-tory carrying costs arerelated to idleproduction capacity(p. 325). In one sense, perishability and inventory presenta more challenging issue for manufacturers than for ser-vice organizations. When producing for inventory, manu-facturing firms incur both maintenance costs (such asstorage, security, and insurance) and financial carrying




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costs. With an expanded role for the finance function, de-mands for earlier and higher return on capital and mini-mizing inventory and its associated costs have becomeoverriding concerns formanycompanies. Service firms donot have inventory costs of this nature. But the problem ofachieving efficient capacity utililization is universal:

Perisha- bility of productive capacity is as relevant to themanager of a factory producing beds as is it is to a hotelmanager worried about unrented rooms.

Perishability ofcapacity from the producers stand-point is not the same as a perishableexperiencefor a cus-tomer, although both are rooted in the passage of time.And perishable capacity is not the same as perishableout-

put, for without customers who require service at a spe-cific time, either to themselves or their possessions, therecan be no output at most service organizations.

Consumers may view output differently from produc-ers. Most service performances are transient experiences,but this does not mean that the output itself is also perish-able, since some services create durable results, thus rais-ing thequestion of how best to defineoutput. Forinstance,from a hospitals perspective, a surgical procedure repre-sents output; from the patients perspective, it is the out-come of that surgery that is relevant.

However, there is an exception to the rule that, unlikemanufacturers, service firms cannot produce for inventoryand sell their products later. Certain types of live perfor-mancessuch as education, entertainment, music, reli-gious services,andnewscanbe recorded forsubsequentuse through broadcasting or transformed into a reusablephysical good in the form of DVDs, tapes, or other storage

media.We propose an expanded concept of inventory thatbetter represents thechallengesfacing bothmanufacturersand service providers. Classic use of the term refers to astore of physical goods (including foodstuffs and raw ma-terials) following completion of manufacturing, agricul-tural,or extractiveproduction. Butin a context of build-to-order and just-in-time delivery, where even manufacturedproducts are often ordered or reserved in advance, it is rel-evant and important to examine the characteristic of

preproduction inventory. Today, many service industriesexplicitly calculate their future productive capacity forspecific dates and even times of day, relating it to such

variables as hours of service and number of employeesavailable. Planned variations in this capacity can bereduced if customers are willing to queue.

Growing attention is now being paid to maximizingyield per unit of available capacity, by varying prices be-tweentimeperiodsandchargingdifferent rates to differenttypes of customers(Kimes andChase1998). This capacityis then defined in terms of specificunits of service produc-tion, which maybe further categorizedby natureof output.Thus, hotels categorize room nights by type of accommo-

dation; airlinescategorize seats by service class, route, andschedule; consulting firms may allocate billable hoursamong staff with different levels and types of skills; andmaintenance services may allocate labor and machinetime among different applications under both routine andemergency conditions. This notion of preproduction in-

ventory is central to development of revenue (yield)management programs (Kimes 2003).

Conclusion. The generalization that inherent perisha-bility makes services distinctivelydifferent fromgoodsre-quires significant qualification, for it is a multidimen-sional concept encompassing productive capacity, theproducers output, the performance experienced by cus-tomers, and the output they obtain from the service. Pro-ductive capacity is perishable in both manufacturing andservice businesses and in both instances is wasted if un-used. Manufacturers maybe able to usepostproduction in-ventory as a buffer between production and variations in

demand, but carrying this inventory has its costs. For ser-vice firms, the concept of perishable capacity for productsthatcannotbestoredisapowerfuloneiftheindustryisonein which demand is subject to wide fluctuations. Address-ing the problem successfully has major implications forproductivity andprofitability. A logical approach is to em-phasize careful allocation of preproduction inventorythe future capacity to produceamong different marketsegments under different prices and terms at specifictimes. Firms may also attempt to smooth demand throughpricevariations andothermarketing strategies as well as toinventory demand through queuing (Lovelock 1984).

From the customers perspective, some service output

is durable and may even be irreversible. An important ex-ception to the generalization that all services are perish-able is found among information-based services where thereis the option of recording the performances of information-based services in replayable media for later resale and re-use. In these instances, the producers output is durableand replicable, and the customer can enjoy the perfor-mance again and again.

Relating IHIP to SpecificCategories of Services

When is IHIP applicable and when is it not? To con-clude our review, we apply each IHIP characteristic to fourdifferentcategories of services that areadapted from thoseenumerated by Lovelock (1983a), based on whether theservice act is physical or nonphysical in nature andwhether people themselves, owned objects, or informationrepresent thecentral element that is processedto createtheservice. These four categories are (a) physical actions tothe person of the customer (people processing), (b) physi-cal actions to an object belonging to thecustomer (posses-



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sion processing), (c) nonphysical actions directed at thecustomers mind (mental stimulus processing), and (d)nonphysical actions directed at data or intangible assets(information processing). Representative examples ofservices in each category appear in Table 2.

To make the point convincingly that IHIP is notgeneralizable to all services, we do not have to prove thatnone of theIHIP characteristicsever applies to any servicebut simply that there are sufficient exceptions to discreditthe claim of universal generalizability. An evaluation ofthe 16 cells in this table indicates that there are numerousexceptions to thereceivedwisdom that allservicespossesseach IHIP characteristic. Even more telling is the fact thatmanyservicesactuallypossessoneormoreofthe oppositecharacteristics, namely, tangibility, homogeneity, separa-bility, and durability.

Tangibility. By definition, services that entail physicalactions to the person of the customer will involve tangibleprocesses with tangible outcomes. Customers feel and see

(and sometimes hear, smell, and taste) something happen-ing to them when they fly, have surgery (especially if theyremainawake), stay in a hotel,or receivebeauty treatment.They can observe or otherwise be aware of a physical out-comethatmaybeofshortorlongdurationandmayormaynot be reversible. Similarly, there are tangible impacts tocustomers possessions as a result of such services asrepair, maintenance, cleaning, and laundry.

Homogeneity. Improvements in service quality and au-tomation have made it possible to achieve high degrees ofreliability and consistency in delivery of such possession-processing services as freight transport, oil changes forcars, dry cleaning of clothes, and warehousing of stan-dardized parts. Through the medium of prerecorded andedited performances, education and entertainment can bedelivered (and redelivered many times) with zero varia-tions. When a radio or TV station broadcasts a news pro-gram or religious service, the presentation can potentiallybe delivered in exactly the same way to each member ofthe audience in numerous different locations.

Separability. Many services to physical possessions(such as warehousing, repair, freight transport, and laun-dry) or processing of information (such as insurance andnews) do not involve customer participation in actual pro-ductionas opposed to placing an order and paying.Hence, consumption is entirely separable from the pro-duction process. Nor do customers need to be involved in

production of home entertainment or self-study educa-tional services that are prerecorded for later use in adifferent location at a more convenient time.

Durability. Service performances and output that canbe captured through analog or digital recordings arehighly durable. This category embraces a wide array ofservice industries, including education, entertainment,news, andinformation. Theperformances inherent in such


TABLE 2Applicability of Unique Characteristics of Services to Different Types of Services

Service Category Involving

Physical Acts to Physical Acts to Nonphysical Acts to Processing of

Customers Bodies Owned Objects Customers Minds Information

(e.g., passenger transport, (e.g., freight transport, repair/ (e.g., entertainment, (e.g., Internet banking,

health care, lodging, maintenance, warehousing, news, education, insurance, accounting,beauty salons) laundry and cleaning) consulting) research)

CharacteristicIntangibility Misleadingperformance is

ephemeral, but experiencemay be highly tangibleand even result in physicalchanges

Misleadingperformanceis ephemeral but mayphysically transformpossession in tangibleways

Yes Yes

Heterogeneity Yesoften hard to standard-ize because of direct laborand customer involvement

Numerous exceptionscanoften be standardized



Inseparability ofproduction andconsumption

Yes Nocustomer usually ab-sent during production

Only when performance isdelivered live

Many exceptionscustomers often absentduring production

Perishabilitycannot

be inventoried afterproductiona

Yes Yes Numerous exceptions

performance can often bestored in electronic orprinted form

Many exceptions

performance can often bestored in electronic orprinted form

a. Note, however, that some service industries can explicitly inventory defined units of capacity for sale in advance of production.



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intellectual property as software, prerecorded tapes, andCDs can be replayed or rebroadcast time and time againand even illegally copied for use by other parties.

Conclusions on the Generalizabilityof the Four Characteristics

Is IHIP applicable to all services? We contend that theclaim that services are uniquely different from goods onthe four specific IHIP characteristics is not supported bythe evidence; it was only true for certain types of services,as it was for some goods. The claim is even less valid nowthan when services marketing was in its infancy. Our re-view of the literature has not surfaced a single researchproject that investigated the IHIP characteristicsby study-ing, in depth, the complex and varied properties of alltypes of servicesor at least a representativecross sectionof servicesthrough empirical research based ongrounded differences, as distinct from conceptual studiesbased on preconceived criteria.

Major changes in the service sector during the past twodecades have further undercut the validity of the IHIP-based paradigm. Replacement of human inputs by auto-mation and rigorous application of quality improvementprocedures have substantially reduced variability (hetero-geneity) of output in numerous service industries.Outsourcing by companies and delegation by consumersto a specialist provider of tasks that they used to performfor themselves have greatly expanded the incidence ofseparable services. And advances in information technol-ogy and telecommunications, notably development of the

Internet anddigitization of text,graphics, video andaudio,have made it possible to separate customers in both timeand space from the production of numerous information-based services, thus destroying the twin constraints ofboth inseparability and perishability.

As a paradigm, the notion that the four IHIP character-istics make services uniquely different from goods isdeeply flawed. Receivedwisdom, as exemplifiedby main-streammarketing management texts, mayendorse thepar-adigm, but there is no consensus among them on how todefineeach of the IHIP components. Thedisparitywidensamong specialist texts in services marketing, where wefind that only half of alltexts published in recentyears em-

ploy IHIP as a framework for examining differences be-tween goods and services. The underlying problem isrootedin theextensiveandstillgrowing diversityof activi-ties within the service sector and complicated by the factthat goods and services appear in tandem in almost everyoffering (Rathmell 1966, 1974). Consider the caveats of-fered by Grnroos (2000) in reluctantly proposing adefinition of services:

A service is a process consisting of a series of moreor less intangible activities that normally, but notnecessarily always, take place in interactions be-tween the customer and service employees and/orphysical resources or goods and/or systems of theservice provider, which are provided as solutions tocustomer problems. (p. 46)

Lest our judgment on IHIP should be viewed as harsh,we do want to acknowledge some important benefits re-sulting from early acceptance of the paradigm that ser-vices are uniquely different from goods. First, thisconsensus provided the impetus and legitimacy necessaryto launch the new field of services marketing, to stimulatenumerous streams of research, and to generate valuedmanagerial insights (Fisk, Brown, and Bitner 1993). Sec-ond, an understanding of how intangibility, heterogeneity,and inseparability affectedmany services leda host of ser-vice researchers on several continents to recognize that

knowledge about achieving quality in manufacturing wasinsufficient to understand service quality; as a result, theyinitiateda richandproductive researchstream dedicatedtoservice quality improvement (Grnroos 1984; Gummesson1993;Rust, Moorman, and Dickson 2002; Zeithaml, Para-suraman, and Berry 1990). Third, each of the four IHIPcharacteristics taken separatelyandsometimesin partialcombinationcontinues to have ongoing potential to in-form research and practice that is relevant to specific ser-vice industries, categories, and situations. However, moreresearch is needed to determine the extent to which mana-gerial understanding of individual IHIP elements actuallyhas an impact on marketing strategy.

Reflecting on the need for science to continually striveto bring theory and reality into closer agreement, Kuhn(1970) wisely observed that there are always difficultiessomewhere in the paradigm-nature fit. . . . The scientistwho pauses to examine every anomaly he notes will sel-dom get significant work done (p. 82). However, at a cer-tain point, theobserveddiscrepancies becomeso great thata paradigm needs to be reconsidered. Normal science,declares Kuhn, does and must continually strive to bringtheory and fact into closer agreement (p. 80). We con-cludethattherearenowfartoomanyexceptionstothecur-rent service paradigm for it to remain as a central tenet ofservices marketing.

WHITHER SERVICES MARKETING?

Three alternative conclusions may be drawn from thefailure of theIHIP framework to support theparadigm thatservices are different from goods: (a) It is time to abandonthefield of services marketingand integrate it with generalmarketing and management, or (b) we should discard ser-




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vices as a general category and recommend that scholarsfocus on specific service categories, or (c) scholars shouldsearch for a new and more defensible characteristic of ser-vices that will convincingly differentiate it from otherforms of marketing. We briefly consider each option.

Option 1: Declare Victoryand Abandon the Notion

of a Separate Field

Noting the extent to which manufacturing organiza-tions have reoriented themselves around services, Schnei-der (2000) observed that the field has been so successfulthat it is now just another facet of marketing (p. 180).Why, then, is services marketingmore often presentedas aspecial chapter in marketing management textbooks thanintegrated intogeneral marketingtheory? In Kuhns spirit,the major reason is that the marketing literature has beenunwilling to abandon mainstream marketingmanagementconcepts andcategories andto acknowledge services as anintegral part of every industry and producta positionchampioned by Grnroos (2000) and Vargo and Lusch(2004a, 2004b). Such an outcome would be a final vindi-cation of Levitts (1972) prescient claim that everybodyis in service. Even earlier, Norris (1941) concluded thatgoodsarewantedbecause they arecapable of performingservices (p. 137).

Much of the marketing-oriented research reported insome of the service journals is notservice-specific in its appli-cation. For instance, thestudy of customer satisfactionanddissatisfaction, a key topic in developing satisfaction-

related measures of service quality, originated with re-search on goods (Anderson 1973; Cardozo 1965; H. K.Hunt 1977). Relationship marketing has benefited fromservice-specific research (Berry 1983; Crosby, Evans, andCowles 1990; Gummesson 1994, 2002b) but also appliesto consumer durables (especially those of high value) andindustrial goods. The emerging field of customer equitymanagement has its roots in several overlapping researchstreams including direct marketing, service quality, rela-tionship marketing, andbrand equity(Hogan, Lemon, andRust 2002). To theextent that such studies yield manageri-ally useful results, these are healthy developments.

Perhaps a case can now be made by service marketers

for declaring victory and claiming dominion over all mar-keting, on the grounds that service thinking has thor-oughly infiltrated most aspects of goods marketing (Rust1998). But this beguiling perspective conceals an intellec-tual and managerial trap. Lovelock and Wirtz (2004) em-phasized that there is an important distinction betweenmarketingof serviceswherea service is thecore productand marketinggoods throughservice(p.23).Inthelat-ter case, a manufacturing or natural resource firm bases its

marketing strategy on a philosophy of serving customerswell by adding supplementary services that enhance thevalue of the core product. However, that core product stillremains a physical good.

Option 2: Focus on

Specific Service Subfields

An alternative is to cease looking forunifying conceptsacross all services but to retain services marketing as aconvenient andwelcomingtent for those who havechosento focus on specific categories of service that possess uni-fying themes of their own. The motivation for retainingservices as a broad area of special interest lies partly in theeconomies associated with publishing service journals,teaching service courses, or holding service conferences,and partly in encouraging a dialogue on research insightsthat maysometimesbe generalizable from onecategoryofservices to several others.

There are many ways in which new subfields might bedefined, other than the old standby of industry classifica-tions. Numerous proposals have beenmadefor classifyingservices, includingJ. Bowen (1990); Kasper,Van Helsdingen,and de Vries (1999); Lovelock (1983a); Schmenner (1986);and Silvestro et al. (1992).

Consider the following four possibilities. A promisingapproach lies in separating traditional high-contact ser-vices from the growing number of low-contact services(Chase 1978). Within the high-contact category, a largegroup ofservices involving delivery of tangible actions tothe person of the customercan be found. The low-contact

categoryincludes twoparticularlydistinctivegroupingsofservices. The group known ase-services, defined as theprovision of services over electronic networks like theInternet(Rustand Kannan2002),didnot evenexist whenthe field of services marketing first emerged. Much of theproduction task for these physically intangible services isturned over, typically at remote locations, to consumerswho often provide not only their labor but also their ownequipment as they access network systems (Boyer,Hallowell, and Roth 2002). A very different form of lowcontact is found inseparable servicesthat provide tangi-ble acts to physical possessions without requiring thecustomers participation.

A fourth opportunity is to focus oninformation-basedservices that can be recorded and storedon media such asfilms, tapes, or disks. Peter Hill (1999) declared that suchentities are different from both goods and services, de-scribing them as

intangible entities originallyproduced as outputs bypersons, or enterprises, engaged in creative or inno-vative activities of a literary, scientific, engineering,artistic, or entertainment nature. . . . Originals are




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entitiesthatexist independently of their creators andthe medium on which they are recorded. They canalso be recorded on more than one type of me-dium. . . . Once an original has been recorded, it ispossible to produce as many copies as required. . . .When the original is copied onto a blank disk ortape, nothing material is transferred in the process....Theoriginalisnotconsumedorusedup.(p.439)

Readers will note that the four categories of services de-scribed aboveareallones that do not fit comfortably underthe IHIP umbrella, thus suggesting a fifth, residual cate-gory: all those services that can be realistically be charac-terizedas intangible, variable, inseparable, andperishable.

A rigorous approach to categorization might usefullyemploy the procedures for grounded theory (Glaser 2001;Glaser and Strauss 1967; Gummesson forthcoming). De-veloping a grounded theoryinservices would involvecon-ducting a large number of case studies and observations of

a wide array of services andthen looking inductivelyat theresults without employing the lenses supplied by existingconcepts and current beliefs.

Option 3: Search for a New,Unifying Service Paradigm

There are several ways to begin the search for a newparadigm, includingconceptualstudies,empiricalfield re-search, and a reanalysis of extant but unused knowledge.Kuhn (1970) offers a useful perspective when he arguesthat the transition from a paradigm in crisis requires a re-construction of the field from new fundamentals, a recon-

struction that changes some of the fields most elementarytheoretical generalizationsas well as many of itsparadigmmethods and applications (pp. 84-85). We now put for-ward an old but overlooked characteristic,nonownership,as the basis for a new paradigm.

NONOWNERSHIP: ONE POTENTIAL

BASIS FOR A NEW PARADIGM

Early researchers emphasized that there wasno transferof ownership in services (Judd 1964; Rathmell 1974). Yetsubsequent theorizing has largely ignored this striking

characteristic. In pursuit of an ideal paradigm, we proposecreation of a new one around the notion thatmarketingtransactions that do not involve a transfer of ownership

are distinctively different from those that do. We believethat at this stage in theevolution of services marketingthe-ory, this perspective offers the potential to uncover newand different dimensions of service reality.

Exploring the Characteristic

of Nonownership

In dusting off the characteristic of nonownership, wedo not claim that it offers a panacea with necessarily gen-eral properties. Rather, we propose it as a lens to present

aspects not clearly visible in current theory. If customersdo not receive ownership when they purchase a service,then what are they buying? We contend that services in-volveaformofrental or access in which customersobtainbenefits by gaining the right to use a physical object, tohire the labor and expertise of personnel, or to obtain ac-cess to facilities and networks. Although we use the termsrentalandaccess, we remain open to the use of other ter-minology and acknowledge the subtle distinctions be-tween words such asrent,hire, andlease.

Several broad categories can be identified within thenonownership framework.

Rented goods services(Judd 1964). Customers ob-tain the temporary right to exclusive use of a physi-cal good that they do not wish to own or cannotafford to purchase outright. Examples include vehi-cles, power tools, furniture, construction equip-ment, and formal clothing.

Place and space rentals. Customers obtain exclu-sive use of a defined portion of a larger space in abuilding, vehicle, or other area. Examples include ahotel room, a seatin anaircraft, or a suite inan officebuilding. The space is sometimes designated by lo-cation, but in other instances, as in so-called openseating, customers may be free to select one spaceper ticket.

Labor and expertise rentals. Customers hire otherpeople to do work that they either choose not to dofor themselves (e.g., cleaning a house) or areunabletodo because they lack thenecessary strength, tools,or skills. In many instances, customers may effec-tively rent an entire team as in car repair, surgery,and management consultancy.

Physical facility access and usage. Customers rentadmission to a facility such as a museum, themepark, spa, or conference site and can then take ad-vantage of it during the period of validity.

Network access and usage. Customers rent the rightto participate in a specified network such as tele-communications, utilities, banking, insurance, orspecialized information services. Differing terms ofaccess may be developed to meet varying customerneeds and abilities to pay.

In many instances, a service may combine elementsfrom severalof theabovecategories, plus directtransferofone or more physical items. One way of representing sucha package is through themolecularmodeling of marketen-tities proposed by Shostack (1977).




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Implications of the

Rental/Access Paradigm

The division of marketing exchanges into two broadcategoriesthose that involve a transfer of ownershipandthose that do notoffers scholars and practitioners a new

lens through which to observe marketplace activity andexamine data. In theprocess, theremaybe opportunities tosee things that were previously missed. Butterfield (1949)describedsuch a reorientation as picking up theother endof the stick. Let us consider what issues immediatelyjump into focus and demand our attention.

Manufactured goods can form the basis for services.Both household andbusiness customers often find that so-lutionstotemporaryneedsarebettermetbyrentingadura-ble good than owning it. Advertisements can be found inmost Yellow Pages for rentals of a wide array of products,including vehicles, construction and excavation equip-

ment, generators, tents, party supplies, power tools, furni-ture, formal wear, and sporting goods. Users purchasetemporary possession utilityand return the items when nolonger needed.

Marketing goods through rentals raises distinctivechallenges. Consider car rental, where customers obtainthe right touse the car for a defined period withinthe termsof the rental agreement. Although the core product re-mains a physical good, customers brand preferences shiftfrom thecharacteristicsof thevehicle to those of therentalfirm, being shapednot onlyby price but alsoby easeof res-ervation, convenience of rental office locations for pickupanddrop-off,performance of rentalagents, andbenefitsof

loyalty programs.Service often involves selling slices of larger physical

entities. In the category place and space rentals, thephysical entity becomes a sausage from which custom-ers buy slices. Customers gain the right to exclusive buttemporary use of a portion that they can legitimately de-scribeas myseat, myroom, our offices. Thefact thatthe items rented represent subdivisions of a larger entityenables customers to participate in the economies of scalederived from sharing a largerspacewith many users,whileenjoying varying degrees of separation and even privacy.In some instances, the proximity of other customers and

interaction between them is regarded as a positive experi-ence; in others, it may be seen as a trade-off against moreexpensive alternatives. The object is often desired less forits intrinsic qualities than as a means to a broader end. Arestaurant table provides a surface for meals;a theater seatoffers a resting place from which toview a performance. Inboth instances, some locations may be perceived as moredesirable than others. In thecategoryphysical facility ac-cess, customers are not assigned a specific physical slicebut instead have a certain freedom during the period of

validity to select and experience different elements of afacility.

Labor and expertise are renewable resources in ser-

vices. Abraham Lincolns remark that a lawyers timeand expertise are his stock in trade can be applied to all

skilled service jobs. Sometimes the desired task requiresphysical stamina, but increasingly it is intellectual skillsthat customers seek. Assuming adequate rest and goodhealth, the service providers expertise is a renewable re-source, but time itself is perishable.

Time plays a central role in most services. The rentalparadigm explicitly focuses our interest on time as a keyconstruct for both suppliers and customers. Ownership isfor as long as the object lasts or until the owner chooses todispose of it. Rental nearly always relates to a specifiedtime period.

We live in the most time-conscious era in human his-

tory. McKenna (1997) highlight changing expectations ofspeedy delivery and the evolving technologies and proce-dures that make this possible. Berry, Seiders, and Grewal(2002) cite theimportance for firmsof understanding con-sumers perceived expenditures of time in order to createtransaction convenience. But despite Scientific Ameri-cans contention that timehas becometo the21st centurywhat fossil fuels and precious metals were to previous ep-ochs (Stix 2002), the study of time in a service manage-ment context has not received the attention that it merits.

In contrast to the sustained effort to study such con-structs as service quality and customer satisfaction, onlyspasmodic attention has been paid to improving our un-

derstanding of how

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