Are Goods & Services

different ?
Goods Vs Services

Marketing of Services

Basic Differences between Goods &

Services

Customers do not obtain

ownership of services

Service products are intangible

performances, & not objects

Customers often actively involved

in production process

Marketing of Services

Basic Differences between Goods &

Services

Time factor is more important-speed may be key

Often difficult for customers to

evaluate

Absence of inventories after

production

Marketing of Services

Basic Differences between Goods &

Services

More variability in operational inputs

and outputs--harder to improve
productivity, control quality

Delivery systems include electronic

and physical channels

Marketing of Services

Characteristics of Services
The Four

Is

Characteristics of Services -

Intangibility

Inseparability

Inconsistency
or Variability

Inventory
Perish ability

Marketing of Services

Four Is of Services
Intangibility
Inseparability
Inconsistancy
Inventory
perishability
8

Marketing of Services

Services cannot be touched,

seen, tasted, heard, or felt in the
same manner as goods.

Implications of Intangibility
No physical attributes
to demonstrate while
selling - Lack of
Tangible attributes:
which can be

1.

touched,

smelled,

seen,

tasted or

heard prior to
purchase.

Challenges

Stress tangible cues:

Tangible goods which

are included in the
service offer

Physical environment in
which the service
production or
consumption process
takes place

Tangible evidence of
service performance

Solutions

Implications of Intangibility
2.

3.

1
0

Cannot be examined
by customer before
purchase

Do not over-promise &

Risk of loss of
integrity -

This is not what you

told me I am going
to get.

advertised claims
cannot be verified

Challenges

deliver as promised
Communicate explicitly, no
implied meanings
Create strong corporate
image- BRAND
Stimulate word-of-mouth
communications.
Use personal sources of
information.
Provide tangible evidence
for assurance

Solutions

Four Is of Services
Intangibility

Services that cannot be touched,

seen, tasted, heard, or felt in the
same manner as goods.

Inseparability

A characteristic of services that

allows them to be produced and
consumed simultaneously.

Inconsistancy
Inventory
perishability
1
1

Marketing of Services

Implications of Inseparability
1. Combined productivity
effect-

1
2

Customer & employee

jointly participate &
influence transaction

Best net-performance
with matching
contribution of
customer &
employees

Inefficiency of anyone
pulls other down.

Challenges

Automate service

processes.
Develop processes to
manage customers.
Select right customer
and train them for
participation
Emphasize right
selection and training
of employees

Solutions

Implications of Inseparability
Simultaneous
production and
consumption of
Services :

2.

1
3

Goods first produced,

then sold and then
consumed

Services first sold,

then produced and
consumed together

No mass production

Challenges

More precise demand

forecasting & capacity

planning
Introduce self-service,
automation & electronic
delivery.
Customize services to
your advantage

Solutions

Four Is of Services
Intangibility
Inseparability
Inconsistancy
Inventory
perishability
1
4

Marketing of Services

Services that cannot be touched,

seen, tasted, heard, or felt in the
same manner as goods.
A characteristic of services that
allows them to be produced and
consumed simultaneously.
A characteristic of services that
makes them less standardized
and uniform than goods.

Why are Services Inconsistent

Presence of Human Element

Different Service
employees will
perform same
process differently
Different customer
have different
expectations &
capabilities
15

Marketing of Services

Same employee will perform same

process differently

At two different
times

Under different
situation

Implications of Inconsistency
Limited control on
quality of service
delivered.
Dependence on:

1.

1
6

Performance of
employee/s

Participation of
customer

Challenges

Increase standardization
of procedures

Customization within
tolerance for individual
customer

Train employees &

Develop in process for
quality control

Solutions

Implications of Inconsistency
No sure knowledge
that the service
delivered matches
what was planned
and promoted

2.

Risk of loss of integrity -

3.

1
7

This is not what you

told me I am going to
get.

This is not what I got

last.

Challenges

Educate customer &

employees :
What is to be expected &

what not to.

Clearly define &
communicate acceptable
variance in service delivery.
Keep measuring customer

expectation and monitoring

satisfaction regularly
Encourage employees to
communicate with
customers to mitigate
dissonance.

Solutions

Four Is of Services
Intangibility
Inseparability
Inconsistancy
Inventory
perishability
1
8

Marketing of Services

Services that cannot be touched,

seen, tasted, heard, or felt in the
same manner as goods.
A characteristic of services that
allows them to be produced and
consumed simultaneously.
A characteristic of services that
makes them less standardized
and uniform than goods.
A characteristics of services that
prevents them from being stored,
warehoused, or inventoried.

Implications of Inventory Perishability

1
9

1.

Difficult demandcapacity
synchronization:

Services can not be

stocked

Capacity loss

Loss of unfulfilled
Demand

Challenges

Dynamic & precision

demand forecasting
& capacity planning

Manage demand
shifting

Manage capacity
flexing

Solutions

Implications of Inventory Perishability

2. Customer
dissatisfaction

2
0

Service once fully

or partially
consumed, can not
be returned or
exchanged

Challenges

Clarity in understanding
customer needs

Unambiguous
communication to
customer

Monitor customer
expectations &
satisfaction

Develop servicerecovery & complaint

resolution processes.

Solutions

 Theodore Levitt (worlds best known

marketing expert) commented 30

years ago:
There are no such things as Service or

manufacturing industries. There are

only industries whose service
components are greater or less than
those of other industries.
2
1

Marketing of Services