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Services Marketing
Notes 1.1 Defining Services
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 on
services as it proposed that services are offered only in connection with the sale of goods.
The other definition which was proposed, in 1963, by Regan suggested that services represent
either intangibles yielding satisfaction directly (transportation, housing), or intangibles yielding
satisfaction jointly when purchased either with commodities or other services (credit, delivery).
For the first time services were considered as pure intangibles capable of providing satisfaction
to the customer which could be marketed like tangible products.
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.
Lehtinen, in 1983, defined services as an activity or a series of activities which take place in
interactions with a contact person or a physical machine and which provides consumer
satisfaction.
Kotler and Bloom, in 1984, defined services 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.
Gummesson highlighting the intangible nature of services defined services as something which
can be bought and sold but which you cannot drop on your foot. This definition also pointed
out one basic characteristic that the services can be exchanged even though they are not tangible.
According to Gronross, 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.
Myths about Service Industries
T here are certain myths about services sector. It is because of these myths that people
Caselet
are unable to relate the role and contribution of the services sector in the economy.
The first myth is that a service economy produces services at the expense of other sectors.
The fact is that many service industries are major purchasers of manufactured goods. Take
the example of airlines, fast food outlets, educational institutions, etc., which buy so much
of manufactured products.
The second myth is that service production is primarily labour intensive. In fact, a number
of service sectors like healthcare, hospitality, etc., are capital intensive. Productivity are
therefore equally important in service organisations as returns on capital employed will
be one of the major determinants of success.
The third myth about services is that people satisfy their product needs before the need for
services. This is also not true. Research findings of a study revealed that people value
services as much as products; however, they may buy services in a less cyclical way, as
compared to goods.
Contd...
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