Not easy to define or classify
Essential characteristics of services are intangible
A service is an act or a benefit that does not result in the customer owning anything
Shift from selling products to providing a service is key in understanding modern marketing.
Products are easily copied, price sensitive & often poorly matched to the individual needs of the buyer.
Companies that sell products struggle to maintain profit margins over a long run
Services allow the supplier to decommotitise their offerings by focusing on solving the real performance needs of the consumers & creating tailored solutions to offer genuine value
As the service sector covers a different collection of activities it is useful to look for classification schemes that group organisations with common management concerns.
One major distinction is between the public & private service sectors:
Public services do not depend on customers for their income
Often lack customer orientation where satisfying customers is not an essential for their survival.
Private Sectors are of a varied assortment
Most are geared to make profits but many do not have shareholders
Another major distinction in services is in the competitiveness of the market
Some companies e.g. water are purely monopolistic
They lack a culture of customer service & innovation
These services tend to be more highly regulated than goods
Normally regulated by the government
Law is regulated by their professional bodies
Another distinction for management is whether service is high or low in customer contact.
High services are directed at people – e.g. hairdressing, airlines
Customer goes to supplier’s premises.
The appearance and ambience of the building & the staff have a major impact on how service is evaluated
Quality of service experience is as important as the business itself
Low services are directed at things – e.g. car repairs, postal service
Customer not present for service process
Appearance & interpersonal skills are less critical here
There are 5 major factors that affect how services need to be managed & marketed:
Services can not be touched tasted or smelled like goods can be
They are an experience or a process
Creates number issues for consumer & supplier.
Buyer’s uncertainty is increased as they lack the search qualities