Growth of Service Industries

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Module - 1

Meaning:

According to Philip kotler

Service:-“any act or performance that one party offers to another that is essentially intangible and does not result in the ownership of anything. Its production may or may not be tied to the physical product.”

According to leonard l.berry

“Goods can be defined as objects, devices or things, whereas services can be defined as deeds, efforts or performances.”

Characteristics of services:

Intangibility:

• Cannot be seen like the physical products causing lack of confidence & uncertainty .

• To overcome this, consumer tend to tools for evidence (like people, place , equipment)

Eg: a woman who experiences a facial in beauty parlour cannot for see the exact result.

Inseparability:

• Physical goods which are sold away from the place of manufacturing after some time gap(separated from creator &seller)

• In service , the service provider becomes an integral part of the service itself . Eg: doctor has to perform the operation.

Variability:

• A service is always unique, it only exists once, and is never exactly repeated even by the same service provider. Eg: teacher can not reproduce the same lecture.

Perishability:

• Service cannot be stored. Eg: a few seats remain empty on a train, that particular service opportunity is lost forever.

In ability to own services:

• In physical goods, buyers generally acquire title to the goods

• When a service is performed , no ownership is transferred from seller to the buyer.

• The buyer is merely buying the right to a service process.

Customer participation:

• Eg: counselling & lawyers services.

• Service production is not a one – sided activity

• Customers are co-producers of service.

• The production quality depends upon the ability , skill & performance of the employee as well as the ability & performance of the customers.

Differences between physical goods and services.

|Sl. No. |Physical goods |services | |1. |Tangible |Intangible | |2. |homogeneous |Heterogeneous | |3. |Production & distribution are separated from |Production , distribution & consumption are simultaneous processes. | | |consumption | | |4. |A thing |An activity or process | |5. |Core value produced in factory |Core value produced in buyer-seller interactions | |6. |Customers do not participate in the production |Customers participate in the production | | |process | | |7. |Can be kept in stock |Cannot be kept in stock | |8. |Transfer of ownership |No transfer of ownership |

Classification of services

1. by market segment
• Errand consumer: coaching, taxi, car wash, life insurance. • Organizational consumers: management consulting, machinery repairs, legal services.

2. by degree of tangibility
• rental goods: car rental, hotel room rental
• owned goods: television repairs, plumbing repairs
• Non-goods: college education, tutoring.

3. by skill of service provider
• Professional:...
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