Module 1 : Introduction to Services Marketing Lesson 1 Introduction

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Content
1.1 1.2 1.3 1.4 1.5 1.6 1.7 1.8
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Introduction Keywords What is a Service? Difference between Product and Service What are the different types of services? Concluding Remarks Questions Answers

1.1 Introduction
In this lesson we will learn about the following topics: 1. 2. 3. Whatisaservice? Whatisthedifferencebetweenproductandservice? Whatarethedifferenttypesofservices?

1.2 Keywords
Service,continuum

1.3 What is a Service?

Let us understand what we mean by the word service. Service means a helpful activity performed for others. Say, you have to send a message to your mother whom you cannot visit for some time. Your friend listens to your message, visits your mother and gives the message to your mother. In this way, your friend undertook an activity to fulfil your need. This helpful activity of your friend is an example of service. In this example, your friend delivered the service free of cost. Alternatively, you could use postal service or SMS to deliver the message to your mother. In that case you would have to pay the price for using the service. Those services are called professional services as the shareholders and employees of those companies provide the services to earn their livelihood. Those are also examples of services undertaken for earning a profit over and above the cost of delivering the service. On the other hand several non-profit organisations provide professional services to raise the standard of living of a community. In this case the surplus money is used by the organisation to further attain their social objectives and the surplus is not redistributed among the shareholders of the company. You will learn more about the nature of services in Lesson 2. In Christopher

1.4 Difference between Product and Service

You might have heard about, banking products, insurance products, etc. You have also heard about banking and insurance services. You might be wondering, what is the difference between products and services. In 1976 Adam smith wrote in his book The Wealth of Nations, books I III, that products are result of productive labour while services, however honourable ... useful, or ... necessary were the result of unproductive labour. However, in 1803 Jean-Bapliste Say argued in his book A Tretise on Political Economy, that production and consumption occurred simultaneously in services and therefore services were immaterial products. Products have been classified into four generic categories called hardware, software, processed materials and services in ISO 9000: 2000 standard. Tangible goods which can be discretely counted, like our PC, are called hardware. Intangible information like computer programs, music, etc. can be called software. Processed materials are products that can be measured on a continuous scale like oil. In ISO 9000: 2000 standard, a service has been defined as the result of at least one activity necessarily performed at the interface between the supplier and customer that is essentially intangible. Take the example of a haircut. The activity cannot proceed without interaction between the barber and the client. As explained in the previous section, the hair cutting activity bears the characteristic of palpable intangibility. While mining and agriculture provide natural products, manufacturing produces tangible products, and services deliver intangible benefits during servercustomer interactions.

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Although software has been characterised as an intangible product (ISO 9000: 2000) software (information related) businesses like information technology services, architectural service, advertising service, etc. have been traditionally categorized as service businesses. All product forms including hardware, software, processed materials and services finally deliver intangible benefits to customers and are used in the service of people. For instance, a photocopier machine is used in providing photocopying services. We visit restaurants to have food, yet, we say that restaurants provide a service because the restaurant undertakes all activities to produce the food and help us consume the food. So, the restaurant provides both goods and services. In 1992, Professor Mary Jo Bitner wrote that products and services lie on a product-service continuum as illustrated in Figure 1.1. While pure products lie at the tangible end, pure services lie at the intangible end. Marketers have to focus on the tangible characteristics of products to meet the need of their customers. On the other hand service marketers have to focus more on the consumers as consumers become part and parcel of the service delivery. School

Bank Clinic Airline Hotel Productcentric TANGIBLE FastFood Outlet

HIGHCUSTOMER INVOLVEMENT

Cosmetics Automobile Detergent Salt Softdrink

Figure Error! No text of specified style in document..1 Product-Service Continuum

1.5 What are the different types of services?

In the previous paragraph we have discussed how the service of your friend satisfied your need. How many types of needsdowehave?ProfessorManfredMaxNeefclassifiedthefundamentalhumanneedsin1987.Wecanlistvariousservices thatentrepreneurslikeyoucanoffertosatisfyeachofthefundamentalneedsofpeople.Readthislistwrittenin TableError!Notextofspecifiedstyleindocument.1below.

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TableError!Notextofspecifiedstyleindocument.1ClassificationofServicesbasedonMaxNeefsFundamentalHumanNeeds Being Need (qualities) (things) (actions) (settings) Feeding,Healthcare, Retailand Supplyservices socialsecurity, healthsystems, work cooperate, plan,takecare of,help share,takecare of,makelove, express emotions Housing,Clothing, Security,Safety, Maintenanceand Insuranceservices Friendship,Dating, MarriageandGifting services Having Doing Interacting TypesofServices

subsistence

physicalandmental food,shelter,work health

feed,clothe, rest,work

livingenvironment, socialsetting

protection

care,adaptability, autonomy

socialenvironment, dwelling

affection

respect,senseof humour, generosity, sensuality criticalcapacity, curiosity,intuition receptiveness, dedication,sense ofhumour imagination, tranquillity, spontaneity imagination, boldness, inventiveness, curiosity senseofbelonging, selfesteem, consistency

friendships,family, relationshipswith nature

privacy,intimate spacesof togetherness schools,families, universities, communities

Understand ing

analyse,study, literature,teachers, meditate, policies,educational investigate responsibilities, duties,work,rights cooperate, dissent,express opinions daydream, remember, relax,havefun

Education,Investigation andMeditationservices

participation

associations,parties, Trade,Conference, churches, Communicationand neighbourhoods Travelservices landscapes,intimate spaces,placestobe alone spacesfor expression, workshops, audiences placesonebelongs to,everydaysettings

leisure

games,parties, peaceofmind

Entertainmentservices

creation

invent,build, abilities,skills,work, design,work, techniques compose, interpret language,religions, work,customs, values,norms gettoknow oneself,grow, commitoneself

Selfservice

identity

Club,Association, Prayerservices

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freedom autonomy,passion, selfesteem,open equalrights mindedness dissent,choose, runrisks, develop awareness anywhere Justiceand Enforcementservices

Nowthatwehavediscussedthekindofserviceswecanoffer,wehavetoprovidetheseservicesprofessionally.Forthat, wehavetolearnaboutthemanagementofprofessionalservices.Thisincludesvariousdisciplineslikeoperationsmanagement, finance management, human resource management, information systems management and marketing management. In this subject,wewilllearnaboutmanagingthemarketingoftheservicesthatwecanoffertosocietytoearnourlivelihood. You can recollect various services that you use everyday, like, electric supply, water supply, retail, transportation, telecommunication, ATM and education services. You may be already providing some professional service to a company and earningyourlivelihoodfromthecompany.Youmusthaveheardpeoplecomplainingaboutsomeservicewithwhichtheywere dissatisfied. You may have been dissatisfied with some service in the past as the service failed to satisfy you completely. You mighthavewonderedwhythecompanycannotprovidebetterservice.Youmighthavefurtherwonderedwhatcouldimprove thequalityofaservice. Atthesametime,youmighthavebeensatisfiedwithaserviceorevendelightedwithaservice.Weliketopurchasethe service from a particular service provider again and again because we are satisfied with the service offer, unless we do so becauseoftheunavailabilityofanyalternative.Youmayliketoofferaservicetosocietyandmakeitanexcellentofferthatis appreciatedbyyourcustomers.Youwillthenwonderwhatqualitiesshouldbethereintheservicethatyouoffersothatitis appreciatedbyyourcustomers.Atthesametime,youwouldwanttoearnhandsomeprofitsfromyourventuresothatyoucan growyourbusinessyearafteryear.Inordertobeabletoachievethoseobjectives,youhavetolearnaboutservicesmarketing.

1.6 Concluding Remarks

Inthislessonwehavediscussedwhatismeantbyaservice,whatarethedifferencesbetweenproductsandservicesand whatarethedifferenttypesofservices.Inthenextlessonwewillturnourattentiontowhatweunderstandvariousaspectsof marketingofservices.

1.7 Questions
Q1.Writethedefinitionofservices. Q2.Whatarethedifferenttypesoffundamentalhumanneedsthatservicescansatisfy? Q3.AnalysetheproductservicecontinuumillustratedinFigure1.1.Placefirefightingservices,carrepairservicesandhealthclub servicesonthiscontinuum.Whatisthesignificanceoftheproductservicecontinuum?

1.8 Answers
Q1.Writethedefinitionofservices. Answer:InISO9000:2000standard,aservicehasbeendeficendastheresultofatleastoneactivitynecessarilyperformedat theinterfacebetweenthesupplierandthecustomerthatisessentiallyintangible

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Q2.Whatarethedifferenttypesoffundamentalhumanneedsthatservicescansatisfy? Answer:AccordingtoProfessorManfredMaxNeef,servicescansatisfyninetypesoffundamentalhumanneeds.Theseare:1. Subsistence,2.Protection,3.Affection,4.Understanding,5.Participation,6.Leisure,7.Creation,8.Identity,and9.Freedom. Q3.AnalysetheproductservicecontinuumillustratedinFigure1.1.Placefirefightingservices,carrepairservicesandhealthclub servicesonthiscontinuum.Whatisthesignificanceoftheproductservicecontinuum? Answer:TheproductservicecontinuumillustratedinFigure1.1placesproductsandservicesofagraphrangingfromtangible dominanttointangibledominant.Itshowsthatcustomershavelowinvolvementintheproductionoftangibleproductswhile theyhavehighinvolvementintheproductionofserviceswhilehaveadominantintangiblecomponent.Thus,servicemanagers have to manage customers while they are involved in coproducing a service, to the extent that they must be satisfied (or delighted)withtheirexperienceofservicecoproductionandconsumption.Forexample,whencustomershavetodoarangeof activities in the bank or a selfservice restaurant, they must find the activities to be easy and satisfying, rather that being intriguing,difficultandirritatinginnature. Firefightingservicescanbeplacedattheintangibleendofthecontinuum,whilecarrepairservicesandhealthclubservices canbeplacedtowardstheintangibleendasthesemayinvolvethedeliveryofsomeproductslikesparesandhealthproducts respectively.

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