What is service and service marketing? Discuss the characteristics of service.

Answer: Service is any activity, performing by benefit that one party offers other party that is essentially intangible and it never changes its ownership.

Services marketing is a sub field of marketing which covers the marketing of both goods and services. Goods marketing includes the marketing of fast moving consumer goods (FMCG) and durables. Services marketing typically refers to the marketing of both business to consumer (B2C) and business to business (B2B) services. Common examples of service marketing are found in telecommunications, air travel, health care, financial services, all types of hospitality services, car rental services, and professional services.

A service, according to Vargo and Lusch, is ‘the application of specialized competences through deeds, processes, and performances for the benefit of another entity or the entity itself. Services are economic activities, rather than tangible products, offered by one party to another. Rendering a service to recipients, objects, or other assets depends on a time-sensitive performance to bring about the desired result. In exchange for money, time, and effort, service customers expect value from access to goods, labor, professional skills, facilities, networks, and systems; but they do not normally take ownership of any of the physical elements involved.

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Characteristics of Service:
There are four characteristics that differentiate services from goods—intangibility, inseparability, heterogeneity, and perishability—are major factors driving the differences between goods and services marketing.

Intangibility: Because services are intangible, it is impossible for prospective customers to sample—feel, see, hear, taste or smell—a service before they buy it. Consequently, a company’s promotional program must be explicit about the benefits to be derived from the service, rather than emphasizing the service itself. Four promotional strategies that may be used to suggest service benefits and reduce the effect of intangibility are;

• Visualization: For example, Carnival Cruise Lines the benefits of its cruises with ads that shows happy people dancing, dining, playing deck games, and visiting exotic places.

• Association: By connecting the service with a tangible good, person, object or place, a particular image can be created. Professional sports teams are linked with cities or regions to give them an identity.

• Physical representation: American express uses color—gold or platinum—for its credit card services to symbolize wealth and prestige. Enterprise, the auto rental firm, depicts a car wrapped as a package in its TV ads to emphasize its unique delivery feature.

• Documentation: There are two forms of documentation—past performance and future capability. A hospital can document its past performance, for example, by pointing out in its ads how many babies have been born and cared for in its obstetrics department.

Inseparability: Service typically can not be separated from the creator-seller of the service. Moreover, many services are created, dispensed and consumed simultaneously. For example, dentists create and dispense almost all their services to be performed. The same is true of a fast-food drive-up window employee, a physical therapist, and even an automatic teller machine.

Heterogeneity: It is difficult if not impossible for a service firm, or even an individual seller of services, to standardize output. Each unit of the service is somewhat different from every other unit of the same service because of the human factor in production and delivery. Regardless of its efforts, Delta Airlines does not give the same quality of service on every flight, or even to each passenger on the same flight. All performances of the Boston Orchestra, or all haircuts you get, are not of equal quality.

Perishability: Services are highly perishable because the existing capacity cannot be stored or inventoried for future use. A cruise ship that sails with unoccupied staterooms, empty seats at a church service and idle house painters represent available supply that is lost forever. Perishability creates potential imbalances in supply and demand. Furthermore, the demand for many services fluctuates considerably by season, by day of the week and by hour of the day. Ski lifts can sit idle all summer, whereas golf courses in some areas go unused in the winter. The ridership of city buses fluctuates greatly during the day.

Scope of Services:

Using a broad definition of transactions and customers, it is appropriate to recognize both for profit and non business services organizations.

For-profit services firms sell to consumers or other businesses with profitable operations as a primary goal. This category is reflected in the following examples, classified by industry;

• Housing and other structures: Rental of offices, warehouses, hotels, motels, apartments, houses, and farms.

• Household operations: Home maintenance and repairs, security, landscaping, and household cleaning.

• Recreation and entertainment: Theaters, spectator sports, amusement parks, participation sports, restaurant meals, and resorts.

• Personal care: Laundry, dry cleaning, personal grooming care and spas.

• Medical and health care: Physical and mental medical services, dental, nursing, hospitalization, optometry and physical therapy.

• Private education: Vocational schools, nursery schools, charter schools, and some continuing education programs.

• Professional business services: Legal, accounting, advertising, marketing, research, public relations, and management consulting.

• Financial services: Personal and business insurance, banking, credit and loan service, brokerage service and investment counseling.

• Transportation: Freight and passenger service on common carriers, automobile repairs and rentals and express packaging delivery.

• Communications: Broadcasting, telephone, fax, computer and Internet services.

Non business organization: Non business services organizations are of two types. One type is not-for-profit (N-F-P) services organizations, which have a profit goal because growth and continued existence depend on generating revenue in excess of its costs. However, profit (which may be referred to by a different name such as “surplus”.) is secondary to the N-F-P’s primary objective.

• Educational: Private grade schools, high schools, colleges, and universities.

• Cultural: Museums, opera and theater groups, zoos, and symphony orchestras.

• Religious: Churches, synagogues, temples, and mosques.

• Charitable and philanthropic: Charities, service organizations ( Salvation Army, Red cross), research foundations, and fund raising groups (United Way).

• Social concerns: Organizations dealing with family planning, civil rights, termination of smoking, environmental concerns, the homeless, those for or against abortion, or those for or against nuclear energy.

• Professional and trade: Labor unions, certification groups, professional associations (American Marketing Association), health maintenance organizations.

• Social: Fraternal organizations, civic clubs, special interest clubs.

• Health care: Hospitals, nursing homes, health research organizations (American Cancer Society, American heart association), health maintenance organizations.

• Political: Political parties, individual politicians.

Finally the scope of services is further broadened by including a second type of non business organization. A non profit organization provides services but does not have a profit or surplus objectives.