Nature and Categories of

Services

Activity 1

Create a list of 10 services

List at least 3 service provider’s names

– Time allotted: 5 minutes

What are Services?

“Services are deeds, processes, and performances”

- Zeithaml et al

A few Definitions…..

Activities, benefits, or satisfactions which are offered for sale, or provided in connection with the sale of goods

- Amercican Marketing Association

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 essentially intangible and does not normally result in ownership of any of the factors of production - Christopher Lovelock

A few Definitions….. Any activity or benefit that one party can

offer to another that is essentially intangible and does not result in the ownership of anything. Its production may or may not be tied to a physical product.

- Kotler and Bloom

A service is an activity or series of activities of more or less intangible nature that normally, not necessarily, take place in interactions between the customer and service employees and/or physical resources or goods and/or system of the service provider, which are provided as solution to customer problems - Gronross

So, Services……..

Are deeds, performances or activities offered by one party to another

Are essentially intangible

Do not result in the ownership of anything

Take place in interactions between the customer and the service provider

Service as Theater

“ All the world’s a

stage and all the men and women merely players. They have their exits and their entrances and each man in his time plays many parts”

William Shakespeare

As You Like It

Characteristics of Services Intangibility

– The potential customer is unable to perceive the service before the service delivery

Heterogeneity– The quality of the service may vary depending on who

provides it

Inseparability– Simultaneous Production and Consumption

Perishability– Cannot be stored for later sales or use

Physical Goods Services

Homogeneous Heterogeneous

Production and distribution are separated from consumption

Production, distribution and consumption are simultaneous processes

A thing An activity or process

Core value produced in factory

Core value produced in buyer-seller interactions

Customers do not participate in production process

Customers participate in production

Can be kept in stock Cannot be kept in stock

Transfer of ownership No transfer of ownership

Characteristics of Services vs. Goods

Goods Services ImplicationsTangible Intangible Services cannot be inventoried

Services cannot be readily displayed or communicated

Standardized

Heterogeneous

Pricing is difficult Service delivery and customer satisfaction depend on employee & customer actions Service quality depends on uncontrollable factors There is no sure knowledge that the service delivered matches what was planned and promoted

Characteristics of Services vs. Goods

Goods Services ImplicationsProduction separate from consumption

Inseparable Customers participate in and affect the transaction Customers affect each otherEmployees affect the service outcome Mass production is difficult

Nonperishable Perishable Difficult to synchronize supply and demand with services Services cannot be returned or resold

Activity 2 Give examples of each of the

following type. Also list the names of at least two companies offering that good/service.

– A pure tangible good

– Tangible good with accompanying service

– A major service with accompanying minor goods or services

– A pure service Time allowed: 5 minutes

Categories of Goods - Services

A pure tangible good

Tangible good with accompanying service

A major service with accompanying minor goods or services

A pure service …….Kotler’s

Categorization

Activity 3

A list of simple goods/services is provided in the next slide

Place these services in an appropriate position in the following continuum:

Tangible ____________________ Intangible dominant dominant

List for Activity 3

Salt Soft drinks Detergents Automobiles Cosmetics Fast-food outlets Ad agencies Airlines Investment management Consulting Teaching

“Breaking free from product marketing”

Lynn Shostack, 1977

Tangibility Spectrum

TangibleDominant

IntangibleDominant

SaltSoft Drinks

DetergentsAutomobiles

Cosmetics

AdvertisingAgencies

AirlinesInvestment

ManagementConsulting

Teaching

Fast-foodOutlets

Fast-foodOutlets

Activity - 4 A list of services is provided next.

Place these in an appropriate quadrant in the matrix below:

People Processing Possession Processing

Mental Stimulus Processing

Information Processing

(directed at intangible assets)

TANGIBLE ACTS

DIRECTED AT PEOPLE

DIRECTED AT POSSESSIONS

TANGIBLE ACTS

List for Activity - 4

Health care Accounting Lodging Beauty salons Phisiotherapy Music Concerts Insurance Freight transportation Fitness center Restaurants Legal services

Advertising Passenger

transportation Broadcasting Repair and

Maintenance Landscaping Psychotherapy Banking Laundry and Dry

Cleaning Education

“Classifying services to gain strategic marketing insights”

Christopher Lovelock, 1983

Lovelock’s Classification

People Processing Possession Processing

Mental Stimulus Processing

Information Processing

e.g., passenger transportation, healthcare,

lodging, beauty salons, fitness center

e.g., freight transportation, repair and maintenance, laundry and dry cleaning, landscaping

e.g., broadcasting, Education, advertising, music

concert, psychotherapy

e.g., accounting, Insurance, legal services,

banking

TANGIBLE ACTS

INTANGIBLE

ACTS

DIRECTED AT PEOPLE

DIRECTED AT POSSESSIONS

What is the Nature of the Service Act?

Who or What is the Direct Recipient of the Service?