Service Marketing

The four characteristics of services: The opportunities and

challenges for the Indian business today

To:
Mr. Srikantan

By:

Hitesh Goyal

Reg. No. 10171808

MBA 12
 The four characteristics of services: The opportunities and challenges for the
Indian business today

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 The four characteristics of services: The opportunities and challenges for the
Indian business today

Introduction:

In the past scenario, most of the organizations were production and sales oriented. They believed
that consumers would prefer only those companies’ products which are wildly available. It
demonstrates that organizations were more considered about sale and profit rather than providing
good quality and service. But in present time, the delivery of quality in service and goods has
become more precedence. Companies are more sophisticated about selling product-support
service. They provide pre-purchase and post purchase service to their customers so customers
will not switch to other company. (Kotler & Keller, 2009)
There are many research which reveals delivering good service quality helps firms in term of
making more profit, cost saving and earning market share like the Indian Railway who has done
huge amendment in their service quality and now it is started to making huge margin. Due to
heavy competition, customers have more alternative of service and products and because of this
their expectation of being served well from organization has increased. For example in 1990’s,
there was no any private firm in postal or courier service in India. We had only the Indian
Department of Post fully owned by the government. Due to monopoly, scarcity of resources and
poor service, it used to take minimum 10 to 15 days to post a letter at right address but after
globalization when FedEx and other private firms entered in this sector there is huge amendment
in this sector. These private firms take hardly one or two days to send a courier at any part of
India. They are trying to be service oriented rather be a product oriented companies. Because of
their good service, they have become market leader and the Indian Department of Post is losing
their market share. Similarly, Indians consumers do not consider high cost or money now, they
consider only about good service. If a company will not provide good service then consumers
will switch to other company. (Hoffman & Bateson, 2006)

Executive Summary:

The purpose of this report is to understand the conceptual framework of service marketing and
its characteristics, the opportunities and challenges steaming from these characteristics and
strategies suggest overcoming from these problems which I have learnt in the class.

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 The four characteristics of services: The opportunities and challenges for the
Indian business today

Methodology: - I have referred various books and journals and web resources on service
marketing to complete this report.

Main Finding and Conclusion: - After completing this report I have found that delivering
constantly good service to consumers is difficult but at last it profitable for every organization.
An organization can reduce these threats and challenges by improve its service quality,
communicate with customers such as doing surveys, collecting sampling at set level of time and
deliver the service or products at right time which help to increase the customer satisfaction.

Overview of Service Marketing:

Service marketing is the act which one party provide to other in form of value added service, and
it cannot be tangible and changing of ownership. It is all about relationship with users,
experience about particular service, process of that service and creating value and trust between
service provider and user. Service is also considered as an element which helps firms to
distinguish itself to its competitor. (Lovelock, Wirtz & Chatterjee, 2006) The service component
can be amajor or miner of total offering such as:

 Tangible goods with accompanying services where the offering consists of physical
goods accompanied by one or more than one services. Commanly, the more innovative,
advanced and tecnological the goods or prducts, the greater the need for high quality
supporting services such as car, mobile and laptop.
 Hybrid goods and services where the offering consists equal quality of goods and
services such as people patronize restraurant for both the food and its preparation.
 Major services with accompanying minor goods where the offering consists major
service along with supporting goods such as airline industry.
 Pure service where the offering consists primarily of a service such as Massage Center,
Barber shop, legal services and so on. (Kotler & Keller, 2008)

In the same way service can be varied in two ways: first is equpment base such as automated car
washer, vending machine and second is people base such as legal services, accountant and

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 The four characteristics of services: The opportunities and challenges for the
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barber. Most of the services needs the presence of customers such as surgery, haircut and many
others. So, if the clients are presence then service providers must be have understanding of
customers’ need such as in any retail store, barber shop or beauty salon, operator should invest in
decoration, play background music and engage with light conversation with clint so it will be
more effective. (Kotler & Keller, 2008)

Distinctive characteristics of Services Marketing:

Services have four characteristics that greatly affect the design of marketing programs:

 Intangibility
 Perishability
 Variability
 Inseparability

Intangibility:

One of the fundamental differences between product and service cited by authors (e.g.
Srinivasan, 2007; Kotler & Keller, 2008; Lovelock, Wirtz & Chatterjee, 2006 and many others)
is ‘Intangibility’. Services are intangible. They do not have physical appearance like products.
They cannot be felt; touched until they are bought for example a person getting cosmetic surgery
cannot be seen until he or she purchase or use the service. So a company should demonstrate
their service quality through physical evidence. (Srinivasan, 2007)

So, it is very important for any company to show physical evidence of their service to customers
for example FedEx. It is one of the largest logistic and courier services provide company. It is in
both businesses “Business to Business where it helps companies in import-export of raw material
and Business to Customers.” It has many evidence of service quality or physical evidence for
example FedEx puts every courier in wood box for protection, they package it in proper manner,
it has scheme like if a courier will not reach at a time then it will pay back all money to its
consumers. In the same way FedEx has their huge transport services such as Cargo planes,
Trucks, Van. FedEx have good technologies such as internet service, ERP, GPS software which
help them to find out the position of courier. It provides free insurance of the courier to their

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 The four characteristics of services: The opportunities and challenges for the
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customers so if the courier lost then they will pay compensation. They have their huge logo,
dress, branch in all cities whether it is metropolitan or tire one or two cities which is totally vice-
versa to Indian Department of Post where they do not have good infrastructure, technology and
trained workforce. If there is good physical evidence then it will make great impact on
customers. (FedEx, 2009)

Challenges:

Intangibility of services can cause lack of assurance and confidence on the part of the customers.
There are some issues like it is complicated for customers to evaluated the service quality and
similarly it is difficult for firm to set the price advertise and display the services. To overcome
this customers tend to look for evidence in quality. Service companies should try to express their
service quality through presentation and physical evidence of efforts made by firm to provide
good quality service.

If we talk about Indian consumers, there are some methods follow by them before using any
services and products such as firstly they want to see, touch and feel the products then they make
decision to buy it but services are intangible. So, it cannot be seen, touched and felt. This is one
of the main challenges for Indian companies.

How to overcome from these challenges?

 Place: If we take retail sector as an example the interiors and exteriors of store should
have clean line. The layout of chairs, and desks, visual merchandising of the store and the
traffic flow should be planned carefully. The billing line should not get overly long.
 People: There should be sufficient numbers of billing counters and employees in retail
store to manage the crowed. They should always be ready to help customers.
 Equipments: Computers, chairs, desks, background music, paintings, trolleys and other
important products should be and look like ‘State of the Art’.
 Symbols and communication materials: Printed materials and symbols such as text,
photos and name should suggest fast services. (Bruhn & Georgi, 2006)

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 The four characteristics of services: The opportunities and challenges for the
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Perishability:

Challenges:

Service cannot be inventoried therefore Perishability can be a problem when demand fluctuates.
The process, service relevant resources and the system are assigned for delivery of a service
during a set period of time. If the schedule customer does not request and consume the service
during the set time then the service cannot be stored and performed next time for him for an
example a barber can serves another client when scheduled time started or time slot is over but a
plane cannot charge for an empty seat after departure. (Hoffman & Bateson, 2006)

The main challenge for service providing companies is if the schedule customer does not request
and consume the service during the set time then the service cannot be stored and performed next
time for him. A service provider cannot charge any service charge from customers as he can do
in product oriented situation.

How to overcome from these challenges?

Several strategies can produce a better match between supply and demand in a service business:

On the supply side:

 Part time employees can help a business to serve peak demand for an example some
colleges add part time faculties when enrollment goes up which help a firm to meet the
demand successfully.
 A company should use better technology to improve their work efficiency.

On demand side:

 A company should differentiate its price according to demand which help them to create
the demand for an example in theater when movie released at that time the ticket price
should be high because of more demand but after some days firm should decrease the
price of ticket to increase the demand.
 Reservation system can be a way which can help company to manage the demand.

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 The four characteristics of services: The opportunities and challenges for the
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The above characteristics are usually referred to in many texts which show that what makes
services marketing so different to product oriented company.

Variability:

Challenges:

The other difference between product and service is Variability. Variability and People (1 p of
st

3’P) are one of the main part of Service Marketing. Each time service is differ and varies for the
next delivery even if the same service provider serves the same service and same service
consumer requests the same service. Because of the service quality depends on who provides
them, where, when and to whom services are highly variable. Those companies who have people
base service process it is difficult for them to deliver same kind of service every time constantly.
It is difficult to achieve the control on quality. (Bruhn & Georgi, 2006)
If we talk about “Mumbai Dabbawala”, they are considered as ‘Six Sigma’ and the ‘Management
Guru’. They have Six Sigma at 99.99% level; it means in every 600000 lunch Tiffin delivery,
they forget one lunch Tiffin or they made mistake after every 600000 lunch Tiffin. Every day
about 200000 Lunch Tiffin are delivered by near 5000 daddawala. They are trying to make 100%
but due to people base service, they make mistake at some point of time. They have started
online booking, coupon service and transport service to reduce the mistake ratio. So it shows that
Variability is the part of Service Marketing. A company can minimize Heterogeneity by using
new technology but they cannot stop it. Invest in good hiring and training procedure but they
cannot stop it fully.
How to overcome from these challenges?

Commonly, service buyers are aware of the variability of the service so they often talk to others
before the selection of service provider. So, to reassure, maintain and gain new consumers
companies should try to offer service quality and guarantees to reduce the consumers’ perception
of risk such as:

 Task standardization: A company should improve their work method and it should

standardize the specific rules and task and then they should work according to it. Every

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 The four characteristics of services: The opportunities and challenges for the
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company should provide service blueprint to employees so they can follow it and which

can simultaneously map out the process of service.

 Investment in training and right hiring: Every company should provide training to its

employees to improve their productivity and which help to lead more customer

satisfaction and achieve the economics of scale.

 Monitor customer satisfaction: Every company should take customer feedback,

employees’ suggestion. They should take consumers’ survey and collect samples which
help them to improve the service.

Inseparability:

Challenges:

The other difference between product and service is Inseparability. Whereas physical goods are
firstly manufactured, put in to stock, distributed through wholesalers and retailers and consumed
later but services are produced and consumed simultaneously. A barber cannot cut hair without
the presence of customer. (Hoffman & Bateson, 2006)

How to overcome from these challenges?

To make services more effective a company should focus on these factors such as:

 Training: Every company should provide training to its employees to improve their

productivity so they can help to achieve the economics of scale.

 Customer involvement: There should be customer involvement in process of service

delivery such as self services.

 Convenience: Location of the store, the opening and closing time of store must be

convenient for customers.

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 The four characteristics of services: The opportunities and challenges for the
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Conclusion:

After completing this report I have found that delivering constantly good service to consumers is

difficult but at last it profitable for every organization. An organization can reduce these threats

and challenges by improve its service quality, communicate with customers such as doing

surveys, collecting sampling at set level of time and deliver the service or products at right time

which help to increase the customer satisfaction. Customer access service quality by comparing

what they want or expect and actually what they got or perceive what they are getting. So an

organization should include these quality when they feed customers such as tangibility where

there should some physical evidence of service, responsiveness where consumer get response at

short time, reliability where the ability to perform service should be independent and consistently

and assurance where employee should have good knowledge, courtesy and ability to convey the

message in proper manner.

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 The four characteristics of services: The opportunities and challenges for the
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Reference:

Berry, L. L. 1999. Discovering the Soul of Service: The Nine Drivers of Sustainable Business
Success. The Free Press, New York.

Berry, L., Zeithaml, V. & Parasuraman, A. Quality Counts in Services, Too. Business Horizons.
May 1985; p44. Retrieved from: Business Source Premier
http://web.ebscohost.com/ehost/detail?vid=3&hid=6&sid=b6bff9db-0bf7-4005-82c5-
74372155eea7%40sessionmgr114&bdata=JnNpdGU9ZWhvc3QtbGl2ZQ%3d
%3d#db=buh&AN=4528473#db=buh&AN=4528473

Bruhn, M. & Georgi, D. (2006). Services marketing: Managing the service value chain. Harrow:
Pearson Education

Dion, P., Javalgi, R. & Dilorenzo, J. An Empirical Assessment of Service Expectations Model.
Service Industries Journal. October 2007; p66-86. Retrieved from: Business Source Premier,
http://web.ebscohost.com/ehost/detail?vid=6&hid=113&sid=2fa69cb2-4b19-478f-8dd4-
06783fc225e8%40sessionmgr110&bdata=JnNpdGU9ZWhvc3QtbGl2ZQ%3d%3d#db=buh&AN

Hoffman, K. D., & Bateson, J. E. G. (2006). Services marketing: Concepts, strategies and cases
(3rd ed.). Mason, Ohio: Thomson South-Western.
Gronroos, C. (2007). Service Management and Marketing: Customer Management in Service
Competition, (3rd). Chichester, West Sussex: John Wiley and Sons, Ltd.

Kotler, P. & Keller, K. L. (2009). Marketing Managment. New Delhi: PHI learnig private
limited.

Kusluvan, S. (2003). Managing Employee Attitudes and Behaviors in the Tourism and
Hospitality. New York: Nova Science Publisher Inc.

Lovelock, C., Wirtz, J., & Chatterjee, J. (2006). Services Marketing. New Delhi: Pearson
Education.

Mudie, P., & Pirrie, A. (2006). Services marketing management. Chennai: Butterworth-
Heinemann.

Nargundkar, R. (2008). Services Marketing. New Delhi: Tata McGraw Hill.

Srinivasan, R. (2007). Services marketing: the Indian context. New Delhi: Prentice Hall Of India.

Verma, H. V. (2009). Service Marketing:Text and Cases. New Delhi: Pearson Education.

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Parasuraman, A., Zeithaml, V. & Berry, L.1998. Problems and Strategies in Services marketing.
Journal of Marketing . p33-46. Retrieved from Business Source Premier
http://web.ebscohost.com/ehost/detail?vid=3&hid=101&sid=0c9855cd-d4fa-4cd1-bcbb-
2707a8462008%40sessionmgr112&bdata=JnNpdGU9ZWhvc3QtbGl2ZQ%3d
%3d#db=buh&AN=5001282

Zeithaml, V. and Bitner, M. (2003) Services Marketing: Integrating Customer Focus Across the
Firm, 3rd ed. New York: McGraw-Hill.

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