It is difficult to provide one single definition of a service, but let’s try:
• Level 1: service is an intangible offering with little or no transfer of physical products to the customer. Ex; car rentals, insurance, education
• Level 2: service is a one part of product-service mix being offered to customers. Ex; restaurants. The physical goods are as important as the service part of the offering & customers have to be satisfied with both
• Level 3: the main offering is the product but the supplier also provides some service. Ex; car service & installation of equipment
• Level 4: every product or service or any combination of a mix of the two ultimately is supposed to provide service for customer. The customer buys a car because it provides him transportation services. This idea is gaining ground as companies are increasingly trying to become customer oriented
Characteristics of Service Marketing
Intangibility: the customer decision is completely dependent on is understanding of the service product at a given point of time & his belief in the marketer’s promise of future performance
• Low Price Sensitivity: performance & price sensitivity are inversely related
• No Inventory: profitability & viability are extremely critical for the service provider is to deliver exemplary service to the customer
• Value Creation Process: in service industry is through people, process, proof of performance & the pace at which the service is delivered
• Tangibility: is provided to the service product by the service provider, communication & the speed at which the service is delivered. The ambiance of the service product helps in creating an appropriate set of beliefs which will help reassure the customer.
o In the context of internet services like call centers, or dedicated websites like shaadi.com or contest2win.com, etc
• Inseparability: services can not be separated from the creator-seller of the service. Eg: Dentists create & dispense almost all their services at the same time, & they require the presence of the consumer for the services to be performed
• Heterogeneity: it is difficult of not impossible for a service firm, or even an individual seller of services, to standardize output . Each unit of service is somewhat different from every other unit of the same service
• Perishability: the services cannot be stored or inventoried for future use.
Importance of Services Marketing
In most industrialized economies, expenditure on services is growing due to:
• Advances in technology that has led to more sophisticated products that require more services
• Growth of per capita income has given rise to a greater percentage of income being spent on luxuries such as restaurants, overseas holidays, etc.,
• A trend towards outsourcing means that manufacturers are buying services that are outside the firm’s core expertise (warehousing, catering)
• Deregulation has increased level of competition in certain service industries like telecom
• Due to growth in per capita income, people are buying more goods, which has contributed to making retailing an important service
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