Prezentace předmětu:
Marketing of services
Vyučující:
Ing. Michal Stoklasa, Ph.D.
Ing. Martin Klepek, Ph.D.
Název
prezentace
Název projektu
Rozvoj vzdělávání na Slezské univerzitě v Opavě
Registrační číslo projektu
CZ.02.2.69/0.0./0.0/16_015/0002400
Logolink_OP_VVV_hor_barva_cz

 NATURE OF SERVICES 1
.
The aim of this presentation is to describe the nature of services and its dissimilarities with
goods markets
Martin Klepek
Garant předmětu
Michal Stoklasa
Přednášející

NATURE OF SERVICES 1
.
Nature of services
Intangibility
Inseparability
Heterogenity
No transfer of ownership
Lecture structure

•In simple words, services are deeds, processes, and performances. But, the increasing interest in
the services sector has been accompanied by considerable disagreement and debate as to what
constitutes a service and whether service marketing is a distinctive subject area. In order to
develop clarity on service as a concept, it is desirable to look at the way various researchers and
scholars have defined this area
•One of the first to define services was the American Marketing Association which as early as in
1960 defined services as “activities, benefits, or satisfactions which are offered for sale, or
provided in connection with the sale of goods”. This definition took a very limited view of
services as it proposed that services are offered only in connection with the sale of goods.
Intorduction
4

•The other definition which was proposed in 1963 by Regan suggested that “services represent either
intangible yielding satisfactions directly (transportation, housing etc.), or intangibles yielding
satisfactions jointly when purchased either with commodities or other services (credit, delivery,
etc.)”. For the first time services were considered as pure intangibles - capable of providing
satisfaction to the customer and can be marketed like tangible products.
Intorduction
5

•Robert Judd defined service as “a market transaction by an enterprise or entrepreneur where the
object of the market transaction is other than the transfer of ownership of a tangible commodity”
•In 1973 Bessom proposed that “for the consumer, services are activities offered for sale that
provide valuable benefits or satisfactions; activities that he cannot perform for himself or that
he chooses not to perform for himself”.
•Another definition given by Blois in 1974 says that, “a service is an activity offered for sale
which yields benefits and satisfactions without leading to a physical change in the form of a
good”.
Intorduction
6

•Stanton proposed a definition in 1974 and defined service as “Separately identifiable, intangible
activities which provide want satisfaction when marketed to consumers and/or industrial users and
which are not necessarily tied to the sale of a product or another service”.
•Kotler and Bloom in 1984, defined service as, “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”.
Intorduction
7

•Gronroos defined a service as “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 systems of the service provider, which are
provided as solution to customer problem
•We may conclude service as, “an activity or series of activities rather than things which has some
element of intangibility associated with it, which involves some interaction between the customer
and the service provider, and does not result in a transfer of ownership. Customer has a vital role
to play in the production process as the services are provided in response to the problems of
customers as solution. The production of the service may or may not be closely associated with a
physical product”. ms”.
Intorduction
8

•It is important to explore the distinctive features of services, because recognition of these
special characteristics will provide insights for enlightened and innovative management. One reason
for the poor quality of service levels across different service industries is that managers often
tend to solve service marketing problems with tools and techniques that are essentially meant for
tangible products. It happens because of inadequate understanding about the nature of services. As
our knowledge of the characteristics of services grows, so does our ability to deal with them from
both an economic and marketing perspective. Services have a number of unique characteristics that
make them different from products
Nature of services
9

•The most basic and universally cited characteristic of services is intangibility, because services
are performances or actions rather than objects, they cannot be seen, felt, tasted, or touched in
the same manner that we can sense tangible goods. For example, when we buy a cake of soap, we can
see, feel, smell and use to check its effectiveness in cleaning.
Intangibility
10

•But, when we pay fees for a semester in the university, we are paying for the benefits of deriving
knowledge, skills and education which is delivered to us by teachers. Teaching is an intangible
service. When we travel by a plane, the benefit which we are deriving is a service (transportation)
but, it has some tangible aspects such as the particular plane in which we fly (Boeing, Avro,
Concorde, etc.) and the food and drink which are served
Intangibility
11

•The broad definition of services implies that intangibility is a key determinant of whether an
offering is or is not a service. While this is true, it is also true that very few products are
purely tangible or purely intangible. Instead, services tend to be more intangible than
manufactured products, and manufactured products tend to be more tangible than services.
Intangibility
12

•Intangibility presents several marketing challenges. Services cannot be inventoried, and therefore
fluctuations in demand are often difficult to manage. It cannot be patented legally, and new
service concepts can, therefore, easily be copied by competitors.
Intangibility
13

•It cannot be readily displayed or easily communicated to customers, so quality may be difficult
for consumers to assess. The actual costs of a ‘unit of service’ are hard to determine and the
price/qualityrelationship is complex.
Intangibility
14

•In most cases a service cannot be separated from the person or firm providing it. A service is
provided by a person who possesses a particular skill (singer, doctor, etc.), by using equipment to
handle a tangible product (dry cleaning) or by allowing access to or use of a physical
infrastructure (hotel, train, etc.). Services are typically produced and consumed at the same time.
Inseparability
15

•The relationship between production and consumption, therefore, dictates that production and
marketing are highly integrated processes. The telephone company produces telephone service while
the telephone user consumes it.
•A plumber has to be physically present to provide the service, the beautician has to be available
to perform the massage. The service provider and the client are often physically present when
consumption takes place.
Inseparability
16

•Generally, most goods are produced first, then sold and consumed. On the other hand, services are
usually sold first and produced and consumed simultaneously. Sasser observed that the firm is
unable to store or transport services, that only direct distribution is possible, thereby
potentially limiting the number of markets that firm can cover.
Inseparability
17

•Apart from the stress laid on ‘right place’ and ‘right time’ in case of distributing goods, there
is additional importance given to the performance of service in the ‘right way’ as well. Another
outcome of simultaneous production and consumption is that service producers find themselves
playing a role as part of the product itself and as an essential ingredient in the service
experience for the consumer.
Inseparability
18

•Since services often are produced and consumed at the same time, mass production is difficult if
not impossible. The quality of service and customer satisfaction will be highly dependent on
actions of employees and the interactions between employees and customers. It is not usually
possible to gain significant economies of scale through centralization.
Inseparability
19

•Usually operations need to be relatively decentralised so that the service can be delivered
directly to the consumer at convenient locations. Since the customer is involved in and observes
the production process, and thus may affect (positively or negatively) the outcome of the service
transaction.
Inseparability
20

•Since services are performances, frequently produced by human beings, no two services will be
precisely alike. The human element is very much involved in providing and rendering services and
this makes standardization a very difficult task to achieve. The doctor who gives us complete
attention in one visit may behave a little differently in next visit. The new bank clerk who
encashes our cheques may not be as efficient as the previous one and we may have to spend more time
for the same activity.
Heterogenity
21

•This is despite the fact that rules and procedures have been laid down to reduce the role of the
human element and ensure maximum efficiency. Airlines, banks, hotels, etc. have a large number of
standardized procedures. Human contact is minimal in the computerised reservation systems, but when
we go to the hotel there will be a person at the reception to hand over the key of the reserved
room.
Heterogenity
22

•The way that person interacts with us will be an important factor in our overall assessment of the
service provided by the hotel. The rooms, the food, the facilities may be all perfect, but it is
the people interacting with us who make all the difference between a favourable and unfavourable
perception of the hotel. Heterogeneity also results because no two customers are precisely alike;
each will have unique demands or experience the service in a unique way.
Heterogenity
23

•Thus, the heterogeneity connected with services is largely the result of human interaction
(between and among employees and customers) and all of the vagaries that accompany it.
Heterogenity
24

•Levitt argues that owing to the industrialisation of services, their production can no longer be
viewed as being heterogeneous. Attempts have been made to improve productivity in the service
sector by introduction of technology. Uniformity can be achieved by substituting equipment and
machinery for labour.
Heterogenity
25

•Hostage suggested that service firms could also reduce variability by training the service
providers in appropriate responses to each customer situation. They can also monitor customer
satisfaction through suggestion and complaint system so that poor service can be detected and
corrected.
Heterogenity
26

•Services are heterogeneous across time, organisations, and people and as a result, it is very
difficult to ensure consistent service quality. Quality actually depends on many factors that
cannot be fully controlled by the service supplier, such as the ability of the consumer to
articulate his or her needs, the ability and willingness of personnel to satisfy those needs, the
presence (or absence) of other customers, and the level of demand for the service. Because of these
complicating factors, the service manager cannot always know for sure that the service is being
delivered in a manner consistent with what was originally planned and promoted.
Heterogenity
27

•Perishability refers to the fact that services cannot be saved, stored, resold, or returned. Since
services are deeds, performances or acts whose production and consumption takes place
simultaneously, they tend to perish in the absence of consumption. Goods can be stored and sold at
a later date in the absence of a customer. Services, on the other hand, go waste if they are not
consumed. A seat on an airplane or in a restaurant, an hour of a professor’s time, or telephone
line capacity not used cannot be reclaimed and used or resold at a later time.
Perishability
28

• A primary issue that marketers face in relation to service perishability is the inability to hold
inventory. Demand forecasting and creative planning for capacity utilisation are, therefore,
important and challenging decision areas. The fact that services cannot typically be returned or
resold also implies a need for strong recovery strategies when things do go wrong. Kurtz and Boone
observed that the utility of most services is short lived; therefore, they cannot be produced ahead
of time and stored for periods of peak demand.
Perishability
29

• The perishability of services is not a problem when demand is steady because it is easy to staff
for the service in advance. When there are wide fluctuations in demand there should be a highly
flexible production system or idle productive capacity. Sasser has described several strategies for
producing a better match between demand and supply in a service business. On the demand side, the
firm can make use of differential pricing, cultivating non-peak demand and developing complementary
services.
Perishability
30

•On the supply side, for effective matching with demand, the firm may hire part time employees to
serve peak demand; peak-time efficiency routines can be introduced, facilities for future expansion
can be developed, and increased consumer participation can be encouraged.
Perishability
31

•When we buy a product, we become its owner-be it a pen, book, shirt, TV or Car. In the case of a
service, we may pay for its use, but we never own it.
•By buying a ticket one can see the evening film show in local cinema theatre; by paying wages one
can hire the services of a chauffeur who will drive his car; by paying the required charges we can
have a marketing research firm survey into the reasons for our product’s poor sales performance,
etc.
•In case of a service, the payment is not for purchase, but only for the use or access to or for
hire of items or facilities; and transfer of ownership does not take place.
No transfer of ownership
32

•The above cited characteristics of services make it unique and that is why services receive
special treatment from marketers. There is general agreement that inherent differences between
goods and services exist and that they result in unique, or at least different, management
challenges for service businesses and for manufacturers that offer services as a core offering.
No transfer of ownership
33

Summary
•In this presentation you have learned what is the nature of services.
•Intangibility meaning services cannot be inventoried, and therefore fluctuations in demand are
often difficult to manage.
•Inseparability is relationship between production and consumption, therefore, dictates that
production and marketing are highly integrated processes.
•Heterogenity meanint no two services will be precisely alike.
•Perishability refers to the fact that services cannot be saved, stored, resold, or returned.
•
•