Page 51 - DMGT206_PRODUCTION_AND_OPERATIONS_MANAGEMENT

Production and Operations Management

Notes Its production may or may not be tied to a physical product. Many manufacturers, distributors
and retailers offer value added services to differentiate their offer from others. There are many
pure service firms who use Internet and e-commerce technology to reach customers.
A pure service has a set of distinctive characteristics that differentiate them from pure goods or
product manufacturing companies in ways having implications for marketing. These
characteristics include intangibility, inseparability, variability, perishability and inability to
own a service.

Intangibility

A pure service is difficult to assess through any of the physical senses. It is a bundle of abstractions,
which cannot be assessed before it is owned. A potential customer can physically examine all the
alternative products in the market before making a choice. He can use criteria like packaging,
aesthetic appearances, taste and smell before making a choice. Many of the benefit claims made
in advertising can be evaluated before making the purchase decision. Pure services do not have
any tangible properties, which can be used as evaluative criteria by consumers before making a
brand choice.
The intangible characteristics that define services include reliability, care and empathy. Attentive
behavior of serving staff can be verified only after the service is purchased and during
consumption. Measurement of service quality is comparatively difficult in pure service cases.
Products in the store have tangible, standardized, physical elements through which they can be
evaluated. In contrast to this, benchmarks for services are embedded in customer’s mind and
have to do with the service provider’s image. Today products are evaluated by comparing with
associated services. Hotels are standardized with star facilities like five star, three star due to a
combination of tangible and intangible factors like location, facilities, number of people serving
per room, the physical ambience and other associated tangible factors. The presence of tangible
components helps customers to evaluate hotels and restaurants on the basis of evident visibility.
There are less tangible services like life insurance where visibility does not augment the service
evaluation.

Intangibility implies lack of physical evidence, which brings uncertainty in the minds of
consumers while making a decision. So, an important task of any service marketer is to create
physical evidence to reduce uncertainty level in consumer’s mind. Developing good physical
evidence and building a strong brand can augment the tangibility component of a service..
While a service marketer tries to augment the service with tangible physical evidence, the
product marketer augments the tangible product with intangible services like after sales service,
warranty and guarantee schemes to enrich the customer experience.

Did u know? Pure goods and pure services move in the opposite direction in terms of the
general approach to tangibility.

Inseparability

Services cannot be separated from the source. The production and consumption of goods are two
separate activities. Companies produce goods in their manufacturing facilities and distribute
them at retailer’s point for consumption. Products can be separated from the source of
manufacturing. Product marketing companies can achieve economies of scale through centralized
production and can have centralized quality management programs. The marketer can market
the product and the consumer can consume it at their convenient time. So production and
consumption are two separate issues in product marketing. Quite contrary to this, the consumption
of services is inseparable from its source of production. In order to realize the benefits of

46 LOVELY PROFESSIONAL UNIVERSITY