Types of Service

Types of Service

There are many types of service organization. We can distinguish them in a number of ways. One distinction is the nature of ownership ­ that is, whether they are private (e.g. warehousing and distribution firms, banks) or public (e.g. police, state­run hospitals) sector organizations. Another is the type of market ­ consumer (e.g. household insurance policy provider, retailer) or industrial (e,g,

Nature and Characteristics of a Service • 647

Figure 15.1

The tangible­intangible continuum for goods and services

computer bureaux). Services can also involve high customer contact, where the service is directed at people, as in the case of hairdressing and healthcare. Or there is low customer contact, as in dry cleaning and automated car­washes, where the services arc directed at objects. Services can be people­based (e.g. consultancies, education) or equipment­bound (e.g. vending machines, bank cash dispensers). People­based services can be further distinguished according to whether they rely on highly professional staff, such as legal advisers and medical practitioners, or unskilled labour, such as porters and caretakers. The wide variety of service offerings means that service providers must address the prob­ lems specific to their particular service when seeking to create and maintain a competitive advantage. Despite this heterogeneity across sectors, there are a number of characteristics that are unique to services.

Service Characteristics

A company must consider five main service characteristics when designing marketing programmes: intangibility, inseparability, variability, perishability and lack of oraners/iip. We will look at each of these characteristics in the following sections. 3

• Intangibility

Service intangibility means that sendees cannot be readily displayed, so they

service intangibility

cannot be seen, tasted, felt, heard or sine lied before they are bought. A buyer can A major chtw­aeteristic of examine in detail before purchase the colour, features and performance of an

services ­ they cannot he audio hi­fi system that he or she wishes to buy. In contrast, a person getting a

.seen, tasted, felt, heard hair­cut cannot see the result before purchase, just as an airline passenger has

or smelted before they nothing but a ticket and the promise of safe delivery to a chosen destination.

are bought. Because service offerings lack tangible characteristics that the buyer can

evaluate before purchase, uncertainty is increased. To reduce uncertainty, buyers look for 'signals' of service quality. They draw conclusions about quality from the

648 • Chapter 15 Marketing Services

Goid's tangibilizes its service by advertising the Gym's equipment line.

place, people, equipment, communication material and price that they can see. Therefore, the service provider's task is to make the service tangible in one or

more ways. Whereas product marketers try to add intangibles {e.g. fast delivery, extended warranty, after­sales service) to their tangible offers, service marketers try to add tangible cues suggesting high quality to their intangible offers. 4

Consider a bank that wants to convey the idea that its service is quick and efficient. It must make this positioning strategy tangible in every aspect of customer contact. The bank's physical setting must suggest quick and efficient service: its exterior and interior should have clean lines; internal traffic flow should be planned carefully; and waiting lines should seem short. The hank's staff should be busy and properly dressed. The equipment ­ computers, copying machines, desks ­ should look modern. The bank's ads and other communi­ cations should suggest efficiency, with clean and simple designs and carefully chosen words and photos that communicate the bank's positioning. Tlie bank should choose a name and symbol for its service that suggest speed and efficiency, Because service intangibility increases purchase risk, buyers tend to be more

influenced by word of mouth, which gives credibility to the service, than by advertising messages paid for by the service provider. As such, the service marketer (the bank in this case) should stimulate word­of­mouth comnnmicalion by targeting opinion leaders who could be motivated to try its services, and satis­

fied customers who could be encouraged to recommend its serviee(s) to peers and friends. Its pricing for various services should be kept simple and clear. Similarly, in the case of Lufthansa and other airlines, marketing managers must identify

ways to 'make tangible' their service, such as highly efficient ground staff and

provision of excellent in­flight comforts.

Nature and GfKCracteristtos of a Service • 649