Everything you need to know about features of services. Services are unique and four major characteristics separate them from goods, namely intangibility, variability, inseparability, and perishability.
The services literature highlights differences in the nature of services versus products which are believed to create special challenges for service marketers and for consumers buying services.
To help understand these differences a number of characteristics that describe the unique nature of services have been proposed.
The peculiar characteristics of services create challenges and opportunities to the service marketers. Services have some important characteristics that have implications for marketing.
Learn about the features of services. They are:- 1. Intangibility 2. Perishability 3. Inseparability 4. Heterogeneity 5. Ownership 6. Simultaneity 7. Quality Measurement 8. Nature of Demand.
Features of Services: 8 Silent Features / Characteristics of Service Marketing
Features of Services – Top 8 Features: Intangibility, Heterogeneity, Simultaneity, Quality Measurement, Nature of Demand and a Few More
Services have some salient features which necessitate a new vision, a distinct approach and a world-class professional excellence to market effectively and profitably. The professionals not well aware of the properties find it difficult to make creative decisions. It is against this background that we go through the salient features with the viewpoint of their instrumentality in making the marketing decisions.
Feature # 1. Intangibility:
Intangibility is an important consideration that complicates the functional responsibility of a marketing manager, specially while influencing and motivating the prospects/customers. The goods of tangible nature can be displayed, the prospects or buyers can have a view and they can even test and make a trial before making the buying decisions. The selling processes are thus found easier. We are aware of the fact that services are of intangible nature and it is intangibility that complicates the task of decision-makers.
While motivating, they find it difficult to perform and display and the positive or negative opinions regarding the services come up only after the completion of the using process. The customer can’t touch the services, they albeit can’t smell them. In a true sense, it is not a physical object. It has mental connotations. According to Carman and Uhl, a buyer of products (goods) have an opportunity to see, touch, hear, smell or taste them before they buy.
Of course, we don’t find the same thing with the services product. It is the professional excellence of decision-makers that counts here, that influences the entire process and that helps them substantially. While selling or promoting services, we need to concentrate on benefits and satisfaction which a buyer can derive after buying. We can hardly emphasise the service itself.
As for example, the banking organisations promote the sale of credit cards by visualising the conveniences and comforts the holders of the credit cards are likely to get from the same. Services carry with them a combination of intangible perceptions. As for instance, an airline sells the seat from one destination to another.
Here, it is a matter of consumers’ perception of the services and their expectations not smelling or tasting the services. They expect safe, fast, decent services. A service by nature is an abstract phenomenon. Thus, it is right to mention that due to intangibility, the selling and marketing of services become much more complicated.
Feature # 2. Perishability:
Another point complicating the task of a professional is the nature of perishability that we find in the services. The goods if not sold today can be stored, preserved for further selling. Thus, the risk element is here in a different form. But in the context of services, if we fail to sell the services, it is lost only not for today but even for the future. If a labour stops to work, if a seat in the aircraft remains unsold, if a bedroom in a hotel remains unbooked, a chair in a cinema hall remains vacant; we find the business non-existent and the opportunities are lost and lost forever. The services can’t be stored or preserved.
Unutilised or underutilised services are found to be a waste. A building unoccupied, a person unemployed, credit unutilised, vacant beds in a hospital are economic waste. Of course, this is due mainly to its perishability. This makes it essential that decision-makers or the executives by using their professionalism minimise the possibilities of economic waste. The opportunities come and you need to capitalise on the same by using your excellence.
Feature # 3. Inseparability:
This is also a feature that complicates the task of professionals while marketing the services. The inseparability focuses on the fact that the services are not of separable nature. Generally, the services are created and supplied simultaneously. Like the dancers, musicians, dentists and other professionals create and offer services at the same time. In other words, the services and their providers are the same. Donald Cowell says, “Goods are produced, sold and then consumed whereas the services are sold and then produced and consumed.”
It is inseparability that makes the task of marketing services a bit difficult. The goods are produced at one point and then distributed by others at other points. In the services, we find the selling processes making ways for the generation of services. The professionals while marketing the services thus bear the responsibility of removing or minimising the gap between the services-promised and services-offered.
Goods are produced, sold and then consumed but the services are sold, produced and then used. The inseparability thus makes it essential that the service-providers are acting and behaving professionally so that the marketing processes are not to pave the avenues for a degeneration in the quality.
Feature # 4. Heterogeneity:
Another feature is heterogeneity which makes it difficult to establish standard. The quality of services can’t be standardised. The prices charged may be too high or too low. In the case of entertainment and sports, we find the same thing. The same type of services can’t be sold to all the customers even if they pay the same price.
The consumers rate the services in a different way. Of course, it is due to the difference in the perception of individuals at the levels of providers and users. The heterogeneity factor makes it difficult to market efficiently. The professionals by using their excellence bear the responsibility of minimising the problem.
Feature # 5. Ownership:
It is also ownership that makes it significant to market the services in a bit different way. The goods sold are transferred from one place to another, the ownership is also transferred and this provides to the buyers an opportunity to resell. In the case of services, we don’t find the same thing. The users have just an access to the service. As for example, a consumer can use personal care services or Medicare services or can use a hotel room or swimming pool, however the ownership rests with the providers.
An expert opines, “A service is any activity or benefit that one party can offer to another that it is essentially intangible and does not result in the ownership of anything.” Here, it is clear that ownership is not affected in the process of selling the services. The issue of ownership has also been clarified by another expert.
He says, “Services are those separately identifiable, essentially intangible activities which provide want satisfaction and that are not necessarily tied to use sales of a product or another services. To produce a service may or may not require the use of tangible goods. However, when such use is required, there is no transfer of permanent ownership to these tangible goods.”
The same theme of not transferring the ownership has also been supported by Batesan. Here, the focus is on the point that transfer of ownership simplifies the task of a marketer since he/she can use it as a motivational tool. In case of services, the professionals experience difficulties because we don’t find any scope for the transfer of ownership. The professionals thus need to be more careful while selling or marketing the services.
Feature # 6. Simultaneity:
Services can’t be delivered to customers or users. Services don’t move through the channel of distribution. For availing the services, it is essential that the users are brought to the providers or the providers go to the users. It is right to say that the services have limited geographical areas.
Carman and Uhl say, “Producers of services generally have small-sized operations than do producers of goods, largely because the producers must travel to get the services or vice versa. When the producers travel to the buyer, time is taken away from the production of services and the cost of those services is increased. It also costs time and money from buyers to travel to producers of services and these economies of time and travel provide incentive to locate more services centres closer to prospective customers which results in smaller service centre.” This can be clarified by a suitable example. Hotel rooms can’t be brought to the users; aeroplane can’t be brought to the customers, etc.
Feature # 7. Quality Measurement:
The quality of service requires another tool for measurement. We can’t measure it in terms of service level. It is very difficult to rate or quantify the total purchase. As for example, we can quantify the food served in a hotel but the way a waiter or a carrier serves it or overall environment or behaviour of other staff can’t be ignored while rating the total process. Hence, we can determine the level of satisfaction at which the users are found satisfied. A firm sells atmosphere, conveniences, consistent quality, status, anxiety, moral, etc.
Feature # 8. Nature of Demand:
While going through the features of services, we can’t underestimate the factor related to the nature of demand. Generally, the services are found of fluctuating nature. Particularly during the peak season, we find an abnormal increase in the demand. As for example, the mobility of passenger is found increased, specially during the marriage season or during an important festival.
The tourists prefer to go the tourist spots or resorts specially during summer when we find the weather condition suitable. The cricket stadiums are used in winter. The golf courses remain unused during the winter. The public transport facilities are used considerably during the beginning and end of office hours. There are a number of examples to prove the peak hour when we find an abnormal increase in the demand position.
The aforesaid features of services make it clear that the professionals working in the services sector need excellence to make available to the customers the promised services without a gap. If the executives working in the different service generating organisations bear the potentials to understand the specialities in the services to be sold, they can do the best possible to understand the expectations of customers.
This simplifies the process of satisfying the customers. It is not meant that the professionals working in the goods manufacturing organisations don’t need excellence. The focus is on the point that since the services as a product are found of sensitive nature and the expectations of customers are found high, it is essential that the professionals understand the services vis-a-vis the customers. This makes an assault on the multi-dimensional problems likely to crop up in the process of selling services.
Features of Services – 4 Main Characteristics: Intangibility, Inseparability, Variability and Perishability
Services are unique and four characteristics separate them from goods, namely intangibility, variability, inseparability, and perishability.
Services are intangible, that is, they cannot be seen. Services being acts, deeds, and performance can be experienced but not possessed. That is, a service unlike a good cannot be sampled, seen, touched, and felt before their consumption. For instance, it is impossible to sample surgery, travel, and theatre performance.
Similarly, an insurance cover bought for life or a car or the service provided by a marriage counsellor or consultant cannot be seen, touched, or smelled. On the other hand, the tangibility of a television set or a mobile phone allows customers to see, touch, hear, and even smell them.
The results of a service experience are discernible to only those customers who experience it. A sample class by a teacher, sample consultation of a doctor, sample experience of a hotel, or a sample flight is distinct from what it purports to be sample of. The sampled event is different from the service event that suggests it being a sample of. Each service experience is distinct and unique.
Service intangibility is the fundamental reason that their marketing assumes different dimensions from physical products. Bateson considers it as a very critical distinguishing feature. Intangibility can have two aspects—palpable intangibility that implies lack of touch ability and mental intangibility that means difficult to grasp something mentally.
This makes service buying difficult for customers. Service buyers therefore bank upon cues to form judgement about marketed services. The extrinsic elements that surround a service are often used by consumers as indicators of quality of service. For instance, a hotel’s quality is judged by tangible elements such as building, lawn, lobby, decor, paintings, staff dress, and lighting.
Goods being physical entities are separable from their production systems. For instance, a mobile phone may be manufactured in China and packed, stored, and shipped to the markets where it is sold to end customers. Goods are separable from their producers in terms of time and place.
Whereas, services do not allow this flexibility; they are not inseparable from their producers. For instance, a surgeon’s surgery, flight of an airline, makeup of an artist, and a hotel’s stay cannot be separated from their producers. This inseparability between the service product and service producer unfolds unique challenges for service marketers.
The lack of separation does not allow services to go to markets without taking service production system along with it. This makes interaction between consumer and service production system essential for its creation and marketing. For example- health services require patients to go to health clinics and a traveller must check in an aircraft in order to be able to use their services. On the other side, customers do not go to Nokia’s factory or Toyota’s plant to buy their products.
The lack of inseparability in services blurs the boundaries between production systems and markets. In marketing of goods, production takes place in factories and goods travel to markets for sales. However in services, this sequence is thwarted because of inseparability.
There are two options—either the customers move to service systems or the service system moves to customers. When patients, students, and travellers move to hospitals, schools, and aircrafts respectively, the market moves to production system. On the other hand, when hotels open branches and doctors pay visit to patient’s house, the production system moves to markets.
Inseparability makes centralized production difficult in services. This is a radical departure from goods marketing. Goods production is generally centralized at some locations in order to reap the advantage of large scale. Services are performed in real time.
Inseparability makes customer-provider interaction mandatory in case of services, which further makes operations and marketing intersect with each other. Services therefore are co-created experiences. This often breeds conflicts between the two functions.
Absence of their conflict resolution often sits at the heart of poor customer satisfaction. The interactions between provider and customer may differ in terms of intimacy and involvement. The interactions between doctor and patient is intimate and involving and whereas in retail it is not so.
Physical goods are produced with a high degree of standardization. They are factory produced or assembled in large numbers with enormous consistency. It is rare to find two cakes of soap like Pears or two pieces of car like Alto different from one another. However, this kind of similarity is near impossible in services. For instance, two visits to a doctor or two lectures of a professor are never exactly same. Two separate stays at a particular hotel are unlikely to be an exact replica of one another. Variability is inherent in services because of their peculiar characteristics including intangibility and inseparability.
There are several reasons that make standardization of services difficult. First, intangibility prevents setting up of precisely defined standards for service product, their conformance, and control. The advances in quality like zero defect has been possible due to their tangible character.
Physical goods have tangible dimensions that permit setting up of quality standards, deviations measurement, and their minimization. Second, service variability is caused by human involvement and customer- provider interactions. Services are produced and consumed in real time.
Unlike goods, services cannot be produced and then quality checked. The lack of separation between production and consumption prevents post-production quality control. ‘A major difference between product marketing and service marketing is that we cannot control the quality of our products as well as a P&G control engineer on a production line can control the quality of his product.
When you buy a box of Tide, you can be sure that it will work to get your clothes clean. When you buy a Holiday Inn room, you are sure to some lesser percentage that it will work to give a good night’s sleep without any hassle, or people banging on walls and all the bad things that can happen to you in a hotel’.
Each service episode tends to be unique in its own right. The interaction between customer and provider cannot be programmed and controlled cent per cent. In spite of a highly regimented service delivery process, each customer brings unique psycho-social aspect to a service encounter.
For instance, service encounters are affected by moods and personality combinations between provider and customer. For instance, service provider’s mood and emotional state despite high training is difficult to control like a machine. Similarly, one customer is unlikely to have similar mental state in two service episodes. Service inconsistency manifests in different forms.
For instance, quality variation can be experienced across different service outlets, for example two branches of Cafe Coffee Day (CCD) may provide different service experience. Variations in service can also be found across time too. For instance, the service quality between lunch and dinner services of a restaurant may differ.
Services cannot be stored like goods because of simultaneity of production and consumption. Unlike goods, which enjoy separation between production and consumption, services are produced and consumed at the same time. For instance, most of the consumer durable companies accumulate inventories prior to the arrival of festive seasons.
These inventories allow them to meet overfull demand later when festivals arrive. However, this luxury is not possible for a service marketer. For instance, hotels and airlines cannot create stocks of their rooms or seats to supply them during the time of excess demand. Inventory is not possible in services.
The lack of inventories greatly reduces flexibility of service firms in coping with fluctuating demand conditions. The inability to align service supply as per demand situations causes service to suffer from revenue loss when demand exceeds capacity and incur excess cost when demand is less than available capacity.
Consider the case of a typical airline company. During the prime travel time during morning and evening between cities such as Mumbai and New Delhi, the demand for travel generally exceeds capacity. Similarly, restaurants have to turn away their customers during lunch and dinner time and cinema theatres fail to accommodate demand during prime shows.
The unaccommodated customers are lost revenue opportunities. On the hand, during the non-peak time aircrafts, restaurants, and cinema theatres face demand conditions far lower than available capacity. Unused capacity is undesirable because assets remain idle.
Unoccupied theatre, airline, and restaurant seats cannot be stored and carried over to cater supply during the time of excess demand. In service industries, output is wasted if it is not consumed simultaneously. The ‘unused capacity in a service business is rather like having as running tap in a sink with no plug, the flow is wasted unless customers, or their possessions that require servicing, are present to receive it’.
Goods marketers are better equipped to align their supply according to demand conditions due to their ability to maintain inventories as a buffer. Services on the other hand stand to lose due to the absence of inventories.
Features of Services – 4 Important Features (With Problems and Marketing Strategy)
The services literature highlights differences in the nature of services versus products which are believed to create special challenges for services marketers and for consumers buying services. To help understand these differences a number of characteristics that describe the unique nature of services have been proposed.
These characteristics were first discussed in the early services marketing literature and are generally summarised as intangibility, inseparability, heterogeneity and perishability.
Although, there has been a debate on the effectiveness of the four characteristics in distinguishing between products and services and used both as the basis for examining services buyer behaviour and developing services marketing strategies.
It is, therefore, important to establish the extent to which these characteristics reflect the perspective of the consumer. A US-based study by Hartman and Lindgren (1993) found that consumers did not use the four characteristics in distinguishing between products and services.
Bitner, Fisk and Brown (1993) suggest that the major output from the services marketing literature up to 1980 was the delineation of four services characteristics- intangibility, inseparability, heterogeneity and perishability. These characteristics underpinned the case for services marketing and made services a field of marketing that was distinct from the marketing of products.
4 I’s of Services Backed by an O:
Services have four distinct characteristics that need to be internalised by service professionals to create opportunities in the market place, to enhance both top and bottom line growth for the firm. Leading researchers have zeroed on Intangibility, Inseparability, Inconsistency, and Inventory while others mention Ownership as well. All these characteristics are providing opportunity as well as challenges to the service marketer.
The distinct characteristics of services need individual focus while taking decisions regarding their organisational set-up.
They are mentioned below:
Feature # 1. Intangibility:
It is one of the most important characteristics of service products. It has no physical dimension and attributes. Service is a deed, a performance, and an effort. The customers buy performance as they cannot see, touch, hear, taste or smell a service before they decide to buy the product.
This makes the perception of service quite subjective. For e.g. a buyer of health club package, for weight loss cannot see what the outcome will be till the programme is over. Therefore, the customers for many services have to buy them on trust as they cannot be inspected before use. In case of goods, a consumer can touch, taste and sample the product. The intangible nature of services makes consumers concerned about their providers.
For e.g. in case of Global Trust Bank, a few years back, the investments made were not as per Regulatory norms, and when it was released in the press, it left many customers uneasy about the financial instability of GTB and there was a withdrawal of deposits as investors’ trust were shaken. Some customers lost total faith and stopped banking.
In fact some service providers like life insurance agents as per IRDA have to undergo 100 hours training to get a license to practice so that they are trained in their profession.
Service products are mostly intangible but are marketed with tangible evidence. This is referred to as tangibilising the intangibles. While services often are accompanied with physical evidence that enables the consumer to make the product less abstract and more tangible, there will always be an intangible element to the service product.
The level of tangibility in the service offer is based on three criteria:
i. Tangible goods which are included in the service offer and consumed by the user.
ii. The physical environment in which the service production/consumption process takes place, and
iii. Tangible evidence of service performance.
Where goods form an important component of a service offer, many of the practices in goods marketing can be applied to this part of the service offer. A firm’s promotional efforts must state the benefits to be derived from a service rather than stressing on the service itself. It is used to communicate the nature and quality of service.
Take for instance an experience on a flight, the total service experience is an aggregate of many components such as experience at the airport, the nature of services on board, the inflight entertainment. Here, there are some tangible elements but most are intangible elements.
Intangibility of services leads customers to have difficulty in evaluating competing services, perceiving and assessing high levels of risk placing more emphasis on personal information sources and often using price as the basis for assessing quality. Hence management responds by reducing service complexity, stressing more on tangible clues, focusing on service quality and facilitating word of mouth recommendation.
While some services are rich in such tangible cues like retail outlets, restaurants, other services provide relatively little tangible evidence like life insurance.
In case of restaurants, it represents a mix of tangibles and intangibles and in respect of the food element, few of the particular characteristics of services marketing are encountered. Therefore, production of the food can be separated from its consumption and the perishability of food is less significant than the perishability of an empty table which results in loss of business. The presence of a tangible component gives customers a visible basis to judge quality.
The tangible elements of the service offered comprise not just those goods which are exchanged but also the physical environment in which a service encounter takes place. Within this environment, the design of buildings, their cleanliness and the appearance of staff present important tangible evidence which may be the only basis on which a buyer is able to differentiate one service provider from another.
Tangibility is further provided by evidence of service production methods. Some services provide many opportunities for customers to see the process of production, indeed the whole purpose of the service may be to see the production process like dramas or skits.
Often this tangible evidence can be envisioned before a decision to purchase a service is made, either by direct observation of a service being performed on somebody else like watching the sculptor work on a statue or indirectly, through a description of the service production process by brochures which illustrate and detail the service process like education. On the other hand, some services provide very few tangible clues about the nature of the service production process.
The lack of physical evidence, which intangibility implies, increases the level of uncertainty which a consumer faces when choosing between competing services. The service marketer’s programme consists of reducing consumer uncertainty by adding physical evidence and the development of strong service brands; in contrast goods marketers augment their products by adding intangible elements such as after sales service and improved distribution.
Feature # 2. Inconsistency (Heterogeneity or Variability):
This characteristic of service also referred to as heterogeneity, is a function of human involvement in the delivery and consumption process. The inseparability of the production and consumption aspects of the service transaction refers to the fact that service is a performance, in real time, in which the customer cooperates with the service provider.
Inseparability is a characteristic of a service indicating that it cannot be separated from the service provider of the product. Therefore a great deal of effort has to go into standardisation of delivery. Since buyers’ and service providers’ interpersonal exchange is involved, there is opportunity for customisation, which can be the Unique Selling Proposition.
Inconsistency occurs largely because different service providers perform a given service on different occasions. The service performed by an individual provider may differ over a period of time because interaction between customer and provider may vary. Every time a service is performed, the process and the customer experience are different.
Services that are provided by individuals rather than equipment will vary, depending upon which individual performs the service, and these will even vary with the same service provider from one job to the next. The service will also vary according to the degree to which clients involved in the production of the service agree.
The degree to which the service firm designs the service delivery system to control variability will influence the quality of the service experienced by the customer.
Customer uncertainty can be reduced by a combination of automation, standardisation and rationalisation. However, inseparability may be desired by those customers who want customised service, rather than standard approaches that are not appropriate for individual situation as in case of interiors for bungalows in exclusive schemes for high net worth individuals.
But it is not possible to standardise service industry output. In case of trips by the Shatabdi Express between Delhi and Agra, the consumer does not get the same quality of service day after day due to different service personnel, snacks, music etc.
The performance of a faculty in a lecture, is not of same standard in each performance, as it will depend on a host of factors like preparation, mood, participation of the students, ambience etc. In case of an income tax consultant, he may provide a different service experience to a high net worth individual and a salaried class clerk because of varying needs and depends on his moods and pressures at the time of the day when the interaction is taking place.
In order to provide consistent services, the firms should standardise staff performance through careful’ planning, control and automation. Firms which are automated have less people and hence they have lower inconsistency in services. A garage which has installed auto car wash facilities with mounting of the vehicle on the ramp can provide consistent services. Banks have installed Automated Teller Machines to provide consistent services due to automation. Fountain, Cola and Pepsi vending machines are some other examples.
While these firms achieve high homogeneity in service delivery, they increase the risk of being inflexible and the staff reacts poorly to the unforeseen problem. Inconsistency is an opportunity and firms can strengthen their brands by customisation with greater empowerment to the staff.
For services, variability impacts upon customers not just in terms of outcomes but also in terms of processes of production. It is the latter point that causes variability to pose a much greater problem for services, compared to goods. Because the customer is usually involved in the production process for a service at the same time as they consume it, it can be difficult to carry out monitoring and control to ensure consistent standards.
The opportunity for pre-delivery inspection and rejection which is open to the goods manufacturer is not normally possible with services. The service must normally be produced in the presence of the customer without the possibility of intervening quality control.
Particular problems can occur where personnel are involved in providing services on a one-to-one basis, such as hairdressing, where no easy method of monitoring and control is possible.
Feature # 3. Inseparability:
Many services are created, delivered and consumed simultaneously through interaction between customers and service producers, whereas goods generally, are produced first and consumed later on. As the customers are involved in the production process, the service quality becomes difficult to measure and control.
For e.g. a doctor creates, delivers all his services simultaneously but the consumer presence is required during the performance of the service. This means that in many cases, people are involved concurrently in the production and marketing efforts of the service organisations.
In most of the cases, the customer receives and consumes the services at the service provider’s premises. Since inseparability characteristic generally means the direct interaction between the service provider and client, it is direct selling.
Inseparability leads customers to being co-producers of the service either alone or with other co-consumers and often they have to travel to the point of production service. The management has to respond to this by separating production and consumption. It has to monitor consumer producer interaction and focus on continuous improvement in the service delivery system.
Production and consumption are separable for goods. On the other hand, the consumption of a service is said to be inseparable from its means of production. Producer and consumer must interact with each other in order to realise the benefits of the service; both must normally meet at a time and a place which is mutually convenient in such a way that the producer can directly pass on service benefits.
For services, marketing becomes a means of facilitating complex producer-consumer interaction, rather than being merely an exchange medium.
Moreover, the service cannot be stocked by the distribution partners, as in case of goods. This poses a major limitation for the service provider. For e.g. a car mechanic can only repair, say, four vehicles per day. Thus individual service seller’s services cannot be sold in many markets or multi locations. This characteristic limits the scale and reach of operation of a service firm.
There are other services which can be sold by a representative of the main service provider e.g. insurance agent, travel agent, but at the final point of service delivery the service provider’s presence is a must. Such services are generally sold by the institutions producing them.
The degree of involvement between transacting parties is dependent upon the extent to which the service is ‘equipment based’ or ‘people based’.
Feature # 4. Inventory (Perishability):
The perishability of services describes the real time nature of the product. Unlike goods, the consumer cannot store the service and the absence of the ability to build and maintain stocks of the product means that sudden demands cannot be accommodated as it can be done in case of goods.
The buyer may decide to delay the consumption but may not consume more in advance than the requirements. For the buyer of services, the time at which they choose to use the service may be critical to its performance and therefore to the consumer’s experience, for e.g., in a Pune Municipal Transport bus the experience in the rush hour is very different than in lean hours.
Consumption of services is directly linked to the experience. In case of services, inventory costs are related to capacity utilisation. In idle service production environment, the inventory cost relates to reimbursing staff along with any needed equipment. E.g. If a lawyer is available but there is no customer during that period, the fixed cost of the idle lawyer’s opportunity is the inventory carrying cost.
Some services have characteristics, where demand for them fluctuates, considerably by season and by day of the week and even hour of the day. An airline which offers seats on a 6.00 am flight from Mumbai to Delhi cannot sell any empty seats once the aircraft has left at 6.00 am. The service offer disappears and spare seats cannot be stored to meet a surge in demand which may occur at 8.00 am.
Few services have a constant pattern of demand over a period of time. Many show considerable variation like daily variation in cyber cafes towards the evening/night , weekends for travel by railways between Pune-Mumbai, seasonal for hotels, cyclical for mortgages or an unpredictable pattern of demand like emergency repair services like electricity after trees falling on electricity lines.
For a travel agent, the demand fluctuates according to time and period and is linked to holidays in school and colleges, in summer and winter coupled to festivals like Diwali, Durga Puja, and Christmas etc., wherein the demand peaks.
The combination of perishability and fluctuating demand present challenges for marketers engaged in planning, pricing, promotion and distribution of services. The cellular companies try to spread out demand for their services by pricing off peak hours to make them more attractive to callers.
They offer “happy hour” rates to increase traffic in lean periods of the day. The services providers focus on strategies for effective capacity management to reduce the inventory costs. Hence, even if volumes can be enhanced with a little margin over variable cost, the firm should push for it.
An appointment with a dentist at a given time, on a given day, cannot be stored and if patient cancels the appointment last minute, the revenue is lost. The firms must monitor their capacity and review it periodically to ensure customers get better service as well as resources of the firm are optimally utilised.
Many services are bought even before they are experienced as in case of pension. Here the service firms have to tackle two issues- first, they have to develop image and reputation to attract customers; secondly, they must retain customers, as competitors try to attract them away, even though they have yet to experience the service.
Perishability occurs because of the inability to store services, inelasticity of short-term supply. This results in demand patterns being irregular with just in time production of services and if managed effectively congestion occurs at peak periods and loss of capacity at off-peak periods. Pricing and promotion are used extensively to encourage customers to utilise services at a time when it is convenient to the service operator in order to have better capacity utilisation.
To manage these characteristics efficiently the service provider has to use the optimum strategies. “The Problems and Strategies in Services Marketing” adapted from Parasuraman, Berry and Zeithmal, “Problems and Strategies in Services Marketing”, and “Journal of Marketing” are described for ready reference.
i. Cannot be easily displayed
ii. Cannot be patented
i. Standardisation hard to achieve
ii. Hard to set up quality control
iii. Can only predict quality or determine it after the service is performed
i. Harder to mass produce
ii. Less efficient than production goods
Customers must be present
i. Provide tangible clues
ii. Stimulate word of mouth
iii. Use personnel sources
iv. Use post purchase communication
i. Stress on standardisation and performance
ii. Focus on employee training
iii. Programs, performance evaluation
iv. Licensing and other forms of credential requirement
i. Need strong training programmes, incentives
ii. Focus on personal attention
i. Focus on convenience, saving time, faster service
ii. Extended hours
iii. Focus on competence and expertise
iv. Predict fluctuating demand
v. Manage capacity to balance supply and demand
In addition to the 4 I’s of services, ownership has been identified as a distinguishing feature of services by some researchers including Kotler.
Ownership is another distinguishing feature of service. The inability to own a service is related to the characteristics of intangibility and perishability. In case of service, when it is performed, no ownership is transferred from buyer to seller. The buyer is merely buying the right to a service process such as the use of a car park or a solicitor’s time.
A distinction should be drawn between the inability to own the service act, and the rights which a buyer may acquire to have a service carried out at some time in the future. In case of service, the buyer has temporary access to or use of it.
What is owned is the benefit of service, not the service itself, e.g. for a holiday tour package to picturesque Manali in Himachal, the buyer has access to hotel, mountains, snow, waterfalls, rivers etc. but doesn’t own any of them.
The inability to own a service has implications for the design of distribution channels, so a wholesaler or retailer cannot take title, as is the case with goods. Instead, direct distribution methods are more common and where intermediaries are used, who generally act as a co- producer with the service provider.
Features of Services: Top 6 Features: Perishability, Changing Demand, Intangibility, Inseparability, Heterogeneity and Pricing of Services
The peculiar characteristics of services create challenges and opportunities to the service marketers.
These are given below:
As a marketable commodity, a service has a high degree of perishability. Time element assumes unique importance. If a service is not used today, it is lost forever. It cannot be Stored. It cann6t be carried forward. Unutilised services are economic losses. A building unoccupied, a person unemployed, credit not utilised, a ship, a wagon or a warehouse loaded to only half its capacity, empty rooms in a five star hotel are illustrations representing perishable nature of services and business which is lost forever.
2. Changing Demand:
The market for services has wide fluctuations. These fluctuations in demand may be seasonal or even by weeks, days or hours. During non-peak hours we need less transport. The use of public transport fluctuates greatly during the day. During night we need less telephone services. Tourism also has seasonal demand. Cricket fields are unused in the rainy season. Golf courses are not used in the winter.
A physical product, e g., a television set, a refrigerator, terelene saree, idli-dossa, face cream, are visible and concrete products. You can see them, feel them, taste them, smell them and even eat or enjoy their possession. It is not possible to see, feel, taste, and smell services before they are bought. A service by nature is an abstract phenomenon. It is not a physical object.
It has mental connotations. While selling or promoting the sale of a service we have to concentrate entirely on the benefits and satisfaction a buyer can derive after buying that service. We cannot emphasize the service itself.
Banks promote the sale of credit cards by emphasizing the conveniences and advantages derived from possessing a credit card. Central card of the Central Bank of India is a new convenience card—Convenience taking on a new name. It is the first of its kind to be launched by a nationalised bank in India. Whether you are out on business, shopping or just dining out, you don’t have to pay cash or give a cheque. By holding a central card you can discover a new way of life.
In this way a bank marketer can promote the sale of any bank service by stressing the benefits, conveniences and other advantages derived from that particular service. The telephone company stresses how the use of telephone can reduce costs of selling and storage by using long-distance calls. Of course, sale of a service, e.g., insurance, involves a real challenge. The burden of selling an intangible product like service falls mainly on the promotion mix.
Personal service cannot be separated from the individual. Some services are created and supplied simultaneously. Dentist, musician, dancer, and such other professionals create and offer service at the same time. Hence, due to inseparability, direct sale of many services is the only channel of distribution. The market for offering personal services is bound to be limited.
A person can sell his service only to a limited number of customers in a day. However, when an institution is acting as a creator of a service, we may have its representatives or agents to sell that service. For instance, a travel agent, an insurance broker, a finance broker, may represent and sell the services supplied by a tourist organisation, insurance company and financial institutions.
The quality of services offered by the competing firms cannot be standardised. Even the quality of the output of services sold by one seller cannot be uniform or standardised. For instance, a technician cannot offer equal quality of service when he is repairing a number of television sets.
Similarly, it is difficult to judge accurately the quality of services. Payment of price and the quality of actual performance may not have perfect correlation Price paid for a service may be too high or too low in relation to actual performance. This is particularly significant in the case of sports and entertainment services.
6. Pricing of Services:
Perishability, fluctuations in demand and inseparability in services involve significant implications in pricing. Consumers may postpone purchases or perform some services themselves. Competition plays a secondary role in many services. Quality of services cannot be fully standardised.
There are many difficulties in pricing of services. In regulated services we have cost plus pricing. Usually prices of other services are determined on the basis of demand and competition. Variable pricing policy is also used in services Discounts are also offered in many services, e.g. insurance, hotel, etc.
Features of Services
Services have some important characteristics that have implications for marketing.
Services are intangible. “They cannot be tasted, felt, heard, or smelled before they are bought”. Intangibility created problems for marketing as it makes very difficult to make consumers convinced about the qualities of a product to encourage its purchase. Therefore, a lot depends on the reputation of the service provider.
As services are intangible, they cannot be patented, legally, and new service concepts can therefore easily be copied by competitors. … Decisions about what to include in advertising and other promotional materials are challenging, as is pricing. The actual costs of a ‘unit of service’ are hard to determine and the price quality relationship is complex.
Services are inseparable from the providers, whether persons or machines. For example, a musician’s performance or a lawyer’s counsel cannot be separated from them. As the quality of the services is highly personal or inherent, another person may not be able to render exactly the same quality. For example, one musician cannot be a substitute for another.
The inseparability imposes limits on the supply of service of a certain quality and image. Several strategies are in use for getting around this limitation. For example, the number of patients attended to by an eye specialist can be increased by having assistants to do the standard routine examinations and the specialist doing only the vital, critical, part of it. Recorded cassettes (i.e., making the service in the product form) can increase the reach of the performance of a musician, although for many it may not be as appealing as enjoying it live.
The quality of service is highly variable. Different people or organisations may not be able to make the quality of their service exactly the same always. Even when the same person provides a service, the quality may vary at different times. The quality of the food served by a restaurant often varies. Consistency in quality is very important. Quality of the people providing the service, standardising service performance process and monitoring customer satisfaction can help improve service quality.
As Zeithaml and Binter point out, “because services are heterogeneous across time, organisations, and people, ensuring consistent service quality is challenging. Quality actually depends on many factors that cannot be fully controlled by service providers, such as the ability of the consumer to articulate his/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.”
Services are perishable in the sense they cannot be stored, resold, or returned. This creates problem to adjust supply with demand. This is sought to be adjusted to by methods such as – differential pricing like off season discounts by airlines, hotels, lower telephone charges during lean hours, advance reservation system etc.
A corollary of the perishability characteristic of service is simultaneous production and consumption. Unlike goods, which are often produced first, then sold and consumed, most services are sold first and then produced and consumed simultaneously.
As a result, service providers play “a role as part of the product itself and as an essential ingredient in the service experience for the consumer”. The simultaneous production and consumption make demand supply management very challenging.
“The quality of service and customer satisfaction will be highly dependent on what happens in ‘real time’, including actions of employees and the interaction between employees and customers. Similarly, it is not usually possible to gain significant economies of scale through centralisation. Usually operations need to be relatively decentralised so that services can be delivered directly to the consumer in convenient locations.”
Features of Services – Top 6 Features: Intangible, Inseparability, Perishable, Heterogeneous, Customer’s Participation and Ownership
‘You cannot touch; you just can feel it’. Ex – In case of child care centre, a women takes care of children from morning to evening, what is seen their? nothing. But everything is performed, done, felt. No physical, material exists but an intangible character is simply provided. The kids are maintained from still evening. A pure service has no tangibility. In fashion designing, the designer designs some design and transfer them to model. The model demonstration services only intangibles exists nothing is given but everything is obtained.
There may be partial tangibility in services. Ex Railways the Jana-shatabdi train (Transportation) the main service is intangible but the dinner, lunch provided would be tangible. The very nature of intangibility is that, their production and consumption instantly takes-place. No ownership is transferred i.e., If you go for a movie by paying Rs. 100/- it does not mean that you became owner of the theatre.
Both the production and consumption should go hand in hand. They cannot be separated. In case of Beauty Parlour, the services provided along with the hair- dressing should be enjoyed simultaneously. You cannot post-pone it. The sale production consumption is the routine activities of services. You buy a ticket for movie, and then enter theatre, movie starts, and then consumptions take place. As and when movie moves you have to consume it, because, both are inseparable.
The basic feature of the services is that, if you do not use, they will perish or die themselves When movie is going on, in a particular seen, if you close the eyes, then it is missed forever because, in the same time you do not got it second time. No store value. At the peak period the services not used will not be obtained in the lean-period.
There cannot be a standard services. Ex – Whenever you go for Beauty Parlour, you won’t get the same service as previously experienced. Homogeneity cannot be incorporated. Because, rendering service involves human element and human element cannot be standardised. He is affected by psychology, behaviour, instincts, etc. Hence, marketing of services is difficult, still customer are habituated to accepts its heterogeneity.
5. Customer’s Participation:
The unique nature of services is that, customer should participate at 100%, otherwise services cannot be given. Ex – If movie is moving, customers should open the eyes. If he fails to participate in the act of movie moments, it cannot be enjoyed. Facial cannot be performed unless face is shown to beautician.
The ownership to services does not exist. A person who goes to theatre cannot with the chair, as he has not paid for it.
The amount paid by the customer is for the observing the running movie but not for anything else. Hence, neither the service ownership is transferred nor obtained both by the seller and buyer.