Marketing Individual Assignment 4
1. What unique characteristics of service are service operators and passenger airlines like Etihad Airways encountering? What unique challenges does Etihad Airways face as a result of such characteristics? Services are intangible activities or benefits that an organisation provides to consumers in exchange for money or something else of value. There are 4 unique characteristics of service operations and passenger airlines like Etihad airways, namely intangibility, inconsistency, inseparability and inventory. Intangibility
Firstly, services are intangible, meaning that they cannot be held, touched or seen before the purchase decision. This is unlike tangible traditional products, which you can see, touch and feel before deciding if you want to purchase it. For example, before you buy breakfast cereal, you might be able to sample it, see it and touch it, before buying it. Whereas for a service like car washing, you will not know how clean your car will become, until after you get your car washed. Since services are usually not an object, but rather a performance of duty, intangibility makes it very difficult to evaluate.
Figure 1. Goods and services offerings of different industries As can be seen in Figure 1, Air travel is a mainly service-dominated industry, which means that Etihad Airways is also subjected to the intangibility of its offerings. As a result, it is very difficult for potential passengers of Etihad Airways to decide if they should indeed engage their flights, as they are unable to experience the service to see if it will be good, before they paid and experience it on their own. This makes it more difficult for Etihad Airways to market their service, as compared to tangible traditional products. Furthermore, even after the flight, since service is an intangible product, it is hard for passengers to quantify the quality of their experience. Etihad Airways would need to find a way to make their service appear tangible, and show all the possible benefits of engaging their flight services. Inconsistency
The quality of services is often inconsistent, due to the fact that services are delivered by people, and hence the quality varies with each individual’s capabilities and their day-to-day performance. For example, a usually very competent and polite air-stewardess could give a passenger less than satisfactory service because she was having flu. This is a contrast from tangible traditional products, which are mostly manufactured in modern production lines which ensures consistency of quality most of the time. Due to inconsistency in people who are the service providers, it would be difficult for Etihad Airways to ensure that all their service staff such as counter staff and air-steward and air-stewardess is always delivering service of the same standard, hence the challenge Etihad Airways face would be the need to come up with plans and trainings that would bring such service standards as close to consistency as possible.
Thirdly, consumer cannot and do not separate the deliverer of the service from the service itself, which means that consumers directly relate the service provider to the service itself. For example,
the consumer has to interact with the deliverer of the service to get the service, such that Inventory
The inventory problem of services is different from that of tangible traditional products. For tangible traditional products, problem exists because goods are perishable and costs include handling inventory. However, in the case of services, inventory carrying costs refer to idle production capacity, which refers to the service provider being available when there is no demand. In the case of Etihad Airways, such costs can be high, depending on the load factor of each flight. If the load factor is low, inventory carrying costs would be high, because there are many seats that are utilized....