Page 10 - DMGT510_SERVICES_MARKETING

Unit 1: Introduction to Services Marketing

Notes
Table 1.1: Characteristics of Services
Service Marketing Implications Strategies
Characteristics
Intangibility Cannot be stored Tangible clues
No patents Personal sources
No ready display WOM
Communication problem Organisational image
Pricing difficulties Cost accounting for prices
Post purchase comm.
Inseparability Consumer involved in Selection and training of contact
production person
No mass production Manage consumer
Supply demand match Multi-site location
Heterogeneity Standardisation difficult Industrialise
Quality control difficult Customise
Perishability No inventorisation Cope with fluctuating demand
Better match through process

1.2.1 More Intangible than Tangible

A good is an object, a device, a thing. A service is a deed, a performance, an effort. When a good
is purchased, something tangible is acquired; something that can be seen, touched, perhaps
smelled or worn. When a service is purchased, there is generally nothing tangible to show for it.
Services are consumed but not possessed, therefore the absence of tangible features means that
it is difficult for the seller to demonstrate or display services and for buyers to sample, test, or
make a thorough evaluation. To reduce uncertainty, buyers look for signs or evidence of service
quality. Therefore, the service provider’s task, according to Levitt, is to “manage the evidence”
and to “tangibalise the intangible”. Shostack even summarised that most market offerings are a
combination of tangible and intangible elements. It is whether the essence of what is being
bought is tangible or intangible that determines its classification as a good or a service.

Task Mention any five services that have significant tangible elements attached to
them and five goods that have service element attached to them.

1.2.2 Simultaneous Production and Consumption

Services are typically produced and consumed at the same time. The relationship between
production and consumption therefore dictates that production and marketing are highly
integrated processes.

Example: The telephone company produces telephone service while the telephone user
consumes it.

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