Services versus Products

Intangibility

A defining characteristic of a service is that it is intangible – it is not something physical that you can see, touch, or taste.

Learning Objectives

Describe how intangibility differentiates a service from a product.

Key Takeaways

Key Points

  • The intangibility of services is what primarily differentiates a service from a product.
  • Intangibility poses a challenge to those marketing a service, as they often need to give tangible proof for the quality of service.
  • Buying services are risky for the customer; hence, providing adequate tangible proof of good service ensures repeat customers.

Key Terms

  • intangible: Incapable of being perceived by the senses; not having a physical presence.

Intangibility

Intangibility is used in marketing to describe the inability to assess the value gained from engaging in an activity using any tangible evidence. It is often used to describe services where there isn’t a tangible product that the customer can purchase, that can be seen, tasted, or touched. This is the most defining characteristic of a service that differentiates it from a product.

When a customer is buying a service, he perceives a risk related to the purchase. It is difficult for a customer to know in advance what they will be getting. To reassure the buyer and build his confidence, marketing strategists need to give tangible proof for the quality of service. Service providers can inspire confidence in the service by having a clean facility that customers can see, an easy-to-navigate website that shows service offerings, and a reliable and courteous staff to help customers. Because of service intangibility, consumers are less likely to switch brands or try new ones.

Given the intangibility of services, marketing them becomes a particularly challenging and yet extremely important task. Due to the increasing homogeneity in product offerings, the attendant services provided are emerging as a key differentiator in the mind of the consumers. For example, in the case of two fast food chains serving a similar product (Pizza Hut and Domino’s), it is the service quality, not the actual product, that distinguishes the two brands from each other. Hence, marketers can leverage the service offering to differentiate themselves from the competition and attract consumers. These services, such as having a polite and friendly staff, can really distinguish one fast food place from another, both of which offer the same kind of food.

A teacher watches as a student writes on a dry erase board.

Intangible Service: Teachers provide a service that is intangible.

Inseparability

Inseparability is a service characteristic that makes it impossible to disconnect the production of the service from its consumption.

Learning Objectives

Describe inseparability in services marketing and how it distinguishes services from goods

Key Takeaways

Key Points

  • The inseparability of services makes it difficult to separate a service from the service provider.
  • The production and consumption of a service can occur simultaneously, making it impossible to produce and store a service prior to consumption.
  • People are a defining factor in a service delivery process, since a service is inseparable from the person providing it.

Key Terms

  • Inseparable: Not able to be separated; bound together permanently.

Inseparability

Inseparability (also known as simultaneity) is used in marketing to describe a key quality of services that distinguishes them from goods.

Inseparability is a service characteristic that renders it impossible to divorce the supply or production of the service from its consumption. In other words, services are generated and consumed within the same time frame. Moreover, it is very difficult to separate a service from the service provider. They are inseparable.

The Importance Of Service Delivery

Service marketing is comprised of people, processes, and physical evidence, all of which which are unique to the marketing of services.

People are a defining factor in a service delivery process, since a service is inseparable from the person providing it. Thus, a restaurant is known as much for its food as for the service provided by its staff. The same is true of banks and department stores. Consequently, customer service training for staff has become a top priority for many companies today.

The process of service delivery is crucial since it ensures that the same standard of service is repeatedly delivered to the customers. Therefore, most companies have a service blueprint which provides the details of the service delivery process. Such blueprints often even go down to defining the service script and the greeting phrases to be used by the service staff.

The concept of inseparability does not mean that the same service will be delivered to each customer; rather, it means that the same standards of quality will be applied to each service. For instance, no two haircuts will be alike, but each customer can be treated with the same amount of respect.

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Haircut: A barber is part of the haircut service that he delivers to his customer. A haircut is delivered to and consumed by a customer simultaneously.

Perishability

Perishability of services implies that service capacity cannot be stored, saved, returned, or resold once rendered to a customer.

Learning Objectives

Describe why business services are perishable and how perishability impacts services marketing

Key Takeaways

Key Points

  • Services cannot be stored, saved, returned or resold once they have been used.
  • When the service has been completely rendered, this particular service irreversibly vanishes as it has been consumed by the consumer.
  • The relevant resources, processes, and systems of a service are assigned for delivery during a definite period in time.
  • Perishability can affect company performance as balancing supply and demand is very difficult.

Key Terms

  • perishable: Liable to perish; short lived.

Perishability

Perishability is used in marketing to describe the way in which a service capacity cannot be stored for sale in the future. Services cannot be stored, saved, returned, or resold once they have been used. Once rendered to a customer, the service is completely consumed and cannot be delivered to another customer.

Services are perishable in two regards. First, the relevant resources, processes, and systems of a service are assigned for delivery during a definite period in time. For example, an airline can only sell seats on an airplane prior to the departure. This service is only available for that definite time period. An empty seat on a plane never can be utilized and charged after departure.

Second, when the service has been completely rendered, this particular service irreversibly vanishes as it has been consumed by the consumer. For example, once a passenger on an airplane has been transported to his destination, he cannot be transported again to this location at this point in time.

Perishability can affect company performance as balancing supply and demand is very difficult. Demand can be difficult to forecast. Demand can vary by season, time of day, or business cycle. As demand fluctuates, it can be very difficult to maintain quality service. For example, to offset high demand during the tourist season, a hotel in Hawaii may hire more employees. However, other time periods are not so easy to predict. During seasons of bad weather, a manager may find himself with too many staff. The opposite problem, that of having too little staff, can be true during an unexpected spike in demand.

A Delta airplane.

Perishable Entity: What an airline ticket entitles a customer to cannot be stored, saved, returned, or resold after the flight. It is a perishable entity.

Heterogeneity

Heterogeneity, also known as variability, describes the uniqueness of service offerings.

Learning Objectives

Discuss how heterogeneity relates to service quality and delivery

Key Takeaways

Key Points

  • While products can be homogeneous and mass produced, the same is not true of services.
  • Many services regarded as heterogeneous are typically modified for each consumer or situation.
  • Despite the heterogeneity of service quality, It is the quality of the service that will essentially set two competing firms with similar products and services apart.

Key Terms

  • heterogeneity: This term describes the uniqueness of service offerings.

While products can be homogeneous and mass produced, the same is not true of services. The term heterogeneity describes the uniqueness of service offerings (also known as variability). In other words, services are generated, rendered, and consumed at one time. The service can never be exactly repeated as the same point in time, location, or circumstances, or with the same configurations or resources, even if the same consumer requests the same service.

Many services regarded as heterogeneous are typically modified for each consumer or situation. For example, the taxi service that transports the consumer from his home to the opera is different from the taxi service that transports the same consumer from the opera to his home. Each trip involved a different point in time, another direction, and maybe another route, taxi driver, or car.

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McDonald’s Big Mac: Big Macs are mass produced and almost identical, but the same is not true for the services rendered by the staff.

Given that services are heterogeneous, it is essential that each and every customer receive excellent service. Heterogeneity of service quality does not imply that no two customers can receive great service, it just means that no two transactions can be repeated identically. It is the quality of the service that will essentially set two competing firms with similar products and services apart. Marketers can leverage the service offering to differentiate themselves from the competition and attract customers.

When the physical product cannot easily be differentiated, there is scope for customizing the service per customer requirements. Such customization ensures that the actual customer encounter assumes particular significance for them. However, too much customization would compromise the standard delivery of the service and adversely affect its quality. Thus, particular care should be taken in designing the service offering.

Client-Based Relationships

Client-service providers aim to build a level of trust with clients that leads to long lasting buyer-seller relationships.

Learning Objectives

Discuss how relationship-building helps retain customers in a competitive marketing environment

Key Takeaways

Key Points

  • Providing customer-oriented services builds long lasting consumer -provider relationships, leading to repeat sales and reduced client turnover.
  • Building service-oriented relationships involves carefully listening to the needs of the customer and fulfilling them through appropriate service offerings.
  • Customer retention has become increasingly important due to fierce competition between service providers.
  • Marketers can leverage service offerings to differentiate themselves from the competition and attract consumers.

Key Terms

  • customer retention: An assessment of the product or service quality provided by a business that measures how loyal its customers are.
  • Homogeneous: Of the same kind; alike, similar.
  • Consumer: The consumer is the one who pays to consume the goods and services produced. As such, consumers play a vital role in the economic system of a nation. In the absence of their effective demand, the producers would lack a key motivation to produce, which is to sell to consumers.

Client-Based Relationships

Relationships are a key factor when it comes to the marketing of services. Since the product is intangible, a large part of the customer’s buying decision will depend on the degree to which he or she trusts the seller. Therefore, the service provider should listen to the needs of the customer, fulfill them through the appropriate service offering, and build a long-lasting relationship that will lead to repeat sales and positive word-of-mouth.

Given today’s highly competitive scenario, in which multiple providers are vying for a limited pool of customers, retaining customers is even more important, and more cost-effective, than attracting new ones. Since services are usually generated and consumed at the same time, they actually involve the customer in the service delivery process by taking into consideration his or her requirements and feedback. Thus they offer greater scope for customization according to customer requirements, potentially offering increased satisfaction and leading to higher customer retention.

Building Relationships

Building client-based relationships is also important due to the increasing homogeneity of product offerings. For example, many beauty salons that offer homogeneous, or similar, services such as a haircut, coloring, and styling. Having an unkempt and unsanitary salon will ensure the client will never come back. Something as simple as cleanliness is a good way to increase client confidence, especially since a client does not know how a haircut will turn out until it is done. Due to the increasing number of salons available, it would be very easy for a client to go elsewhere. However, being friendly, professional, and listening to the needs of the client will help ensure that the client will be a repeat customer.

A Rolls Royce airplane.

Competitive Success: Rolls Royce PLC maintains a competitive edge in the airplane engine industry by adding valued services to improve the quality of its engine.