Characteristics of Services
The below cited characteristics of services make it unique and that is why services receive special treatment from marketers. There is general agreement that inherent differences between goods and services exist and that they result in unique, or at least different, management challenges for service businesses and for manufacturers that offer services as a core offering.
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. eg: A customer dissatisfied with the services of a barber cannot return the service of the haircut that was rendered to him. At the most he may decide not to visit that particular barber in the future.
Services are intangible and do not have a physical existence. Hence services cannot be touched, held, tasted or smelt. This is most defining feature of a service and that which primarily differentiates it from a product. Also, it poses a unique challenge to those engaged in marketing a service as they need to attach tangible attributes to an otherwise intangible offering.Physical products in the store are widely displayed for customers to see, feel, touch, weigh or sniff at before deciding whether or not to buy.Comparing this with the choice of the service of say, an insurance policy. You cannot touch, see or smell the products before choosing, although clearly you can make some assessment based on past experience, word of mouth, or even the location and decor of the insurance office. The intangible nature of most services gives rise to special problems both for suppliers and consumers.
In the production and marketing of physical products, companies have increasingly paid special attention to ensuring consistency in quality, feature, packaging, and so on. More often than not all customers can be sure that every bottle of Coke he/she buys, even in a life-time of purchases, will not vary. The provision of services, however, invariably includes a large measure of the “human element”
Indeed, with many services, we are purchasing nothing else but the skills of the suppliers. Because of this, it is often very difficult for both supplier and consumer to ensure a consistent “product” or quality of service.
Services provided by different individuals and organizations widely differ in price and quality. The price and quality of service are dependent on: who provides the service, how they are provided and where they are provided? Services industries normally make substantial investment in training of personnel to make them competent to provide better services to customers. They also give adequate attention on staff motivation to maintain a consistent quality of services. Some service providers give at home services to customers for higher prices.
A key distinguishing feature of service marketing is that the service provision and provider are inseparable from the service consumption and consumer. For example, we cannot take a hotel room home for consumption; we must “consume” this service at the point of provision. Similarly, the hairdresser needs to be physically present for this service to be consumed.
This has implications both for channels of distribution and scale of operations. In most cases a service cannot be separated from the person or firm providing it. A service is provided by a person who possesses a particular skill (singer, doctor, etc.), by using equipment to handle a tangible product (dry cleaning) or by allowing access to or use of a physical infrastructure (hotel, train, etc.). Services are typically produced and consumed at the same time. The relationship between production and 4 consumption, therefore, dictates that production and marketing are highly integrated processes. The telephone company produces telephone service while the telephone user consumes it. A plumber has to be physically present to provide the service, the beauti cian has to be available to perform the massage. The service provider and the client are often physically present when consumption takes place.
The final distinguishing feature of a service is that, unlike a physical product, the consumer does not secure ownership of the service. Rather the customer pays only to secure access to or use of the service. Again the hotel room is a good example. Similarly, with banking services, although the customer may be given a Cheque book, credit cards, etc, they serve only to allow the customer to make use of what he or she is actually buying, namely, bank services.
When we buy a product, we become its owner-be it a pen, book, shirt, TV or Car. In the case of a service, we may pay for its use, but we never own it. By buying a ticket one can see the evening film show in local cinema theatre; by paying wages one can hire the services of a chauffeur who will drive his car; by paying the required charges we can have a marketing research firm survey into the reasons for our product’s poor sales performance, etc. In case of a service, the payment is not for purchase, but only for the use or access to or for hire of items or facilities; and transfer of ownership does not take place.
Services cannot be stockpiled. Need to avoid excess unsatisfied demand and excess capacity leading to unproductive use of resources. Unlike warehouses full of products, service providers can’t store services for future uses.
Inventory carrying costs are more subjective and lead to idle production capacity. When the service is available but there is no demand, cost rises as, cost of paying the people and overhead remains constant even though the people are not required to provide services due to lack of demand.In the insurance sector however, commission is paid to the agents on each policy that they sell. Hence, not much inventory cost is wasted on idle inventory. As the cost of agents is directly proportionate to the policy sold.
What this characteristic informs is that everyone is different. While you may get the same product every time you buy it, chances are that it tastes the same, looks the same or feels the same. It’s not quite the same with services. Every employee is not the same as the next person. And even though you may get the same great person all the time, there is a 1% chance that they may not be great.It’s human nature; most services’ businesses are people-based and personal performance can vary by workload, the time of day and just life in general.
Each service is unique. It is one-time generated, rendered and consumed and can never be exactly repeated as the point in time, location, circumstances, conditions, current configurations and/or assigned resources are different for the next delivery, even if the same service consumer requests the same service.