Service industry
Training 1
Driving forces of service industry
-increasing consumer incomes and sociological and demographic changes led to increase and
demand for services
-increasing professionalism in companies and technological developments (telecom, software, apps)
Industry division in sectors
-primary sector: farming, forestry and fishing
-secondary sector: industrial sector: gas, mining, manufacturing, electricity, water and construction
-tertiary sector: service sector
Categories of services
-distributive: transportation, communication and trade
-producer: investment banking, insurance engineering, accounting, bookkeeping and legal services
-social: health care, education, non-profit organizations and government agencies
-personal services: tourism, recreational and domestic services
Defining services
Kotler: A service is an activity, benefit or satisfaction offered for sale that is essentially intangible and
does not result in the ownership of anything.
Wirtz: Services are economic activities performed by one party to another. Often time based, these
performances bring about desired results to recipients, objects or other assets. In exchange for
money, time and effort, service customers expect value from access to labor, skills, expertise, goods,
facilities, networks and systems.
Service: all those economic activities that are intangible an imply an interaction to be realized
between service provider and consumer. Non ownership
Service characteristics
-intangibility
-heterogeneity
-simultaneity
-perishability
Intangibility
-services cannot be seen, tasted, felt, head or smelled before purchase
-try before you buy is usually not possible in services
Degree of intangibility
-a service may be or may not be attached with a physical product
Heterogeneity
(Or variability)
-related to the potential of variability in the performance of services
-possible sources of variability: service provider, the customer, the surroundings
Simultaneity
(Or inseparability)
-simultaneity of production and consumption. They always happen at the same time
, Perishability
-cannot be stored for later sale or use
-time is an important dimension for services
-f.e. public transportation
Difference between physical goods and services
Physical goods
-tangible
-homogeneous
-production and distribution are separated from consumption
-physical object
-can be kept in stock
Services
-intangible
-heterogenous
-production, distribution and consumption are simultaneous processes. Customers participate in
production
-an activity or process
-cannot be kept in stock (perishable)
Difference product versus service
Consuming a physical good means making use of the product itself.
Consuming a service means undergoing the process and the final result. That’s the inseparability
factor.
A service can be added to a physical product (=augmented)
Training 2
Marketing mix (4 p’s + 3 additional p’s) > service marketing mix
-price
-place
-promotion
-product
-process
-physical evidence
-people
Process
-in order to deliver a service (cost effective) service firms need to manage their processes.
-process is element of the service marketing mix that looks at the systems used to deliver the service.
e.g. banks that sends out credit cards automatically.
Variability in the process
Challenge in designing services: potential heterogeneity (variability) in the process.
Possible sources of variability are service provider, the customer and the surroundings.
Customer variability in the process
Customers introduce variability in the process
-arrival variability
-request variability
-capability variability
-effort variability
-subjective preference variability
Training 1
Driving forces of service industry
-increasing consumer incomes and sociological and demographic changes led to increase and
demand for services
-increasing professionalism in companies and technological developments (telecom, software, apps)
Industry division in sectors
-primary sector: farming, forestry and fishing
-secondary sector: industrial sector: gas, mining, manufacturing, electricity, water and construction
-tertiary sector: service sector
Categories of services
-distributive: transportation, communication and trade
-producer: investment banking, insurance engineering, accounting, bookkeeping and legal services
-social: health care, education, non-profit organizations and government agencies
-personal services: tourism, recreational and domestic services
Defining services
Kotler: A service is an activity, benefit or satisfaction offered for sale that is essentially intangible and
does not result in the ownership of anything.
Wirtz: Services are economic activities performed by one party to another. Often time based, these
performances bring about desired results to recipients, objects or other assets. In exchange for
money, time and effort, service customers expect value from access to labor, skills, expertise, goods,
facilities, networks and systems.
Service: all those economic activities that are intangible an imply an interaction to be realized
between service provider and consumer. Non ownership
Service characteristics
-intangibility
-heterogeneity
-simultaneity
-perishability
Intangibility
-services cannot be seen, tasted, felt, head or smelled before purchase
-try before you buy is usually not possible in services
Degree of intangibility
-a service may be or may not be attached with a physical product
Heterogeneity
(Or variability)
-related to the potential of variability in the performance of services
-possible sources of variability: service provider, the customer, the surroundings
Simultaneity
(Or inseparability)
-simultaneity of production and consumption. They always happen at the same time
, Perishability
-cannot be stored for later sale or use
-time is an important dimension for services
-f.e. public transportation
Difference between physical goods and services
Physical goods
-tangible
-homogeneous
-production and distribution are separated from consumption
-physical object
-can be kept in stock
Services
-intangible
-heterogenous
-production, distribution and consumption are simultaneous processes. Customers participate in
production
-an activity or process
-cannot be kept in stock (perishable)
Difference product versus service
Consuming a physical good means making use of the product itself.
Consuming a service means undergoing the process and the final result. That’s the inseparability
factor.
A service can be added to a physical product (=augmented)
Training 2
Marketing mix (4 p’s + 3 additional p’s) > service marketing mix
-price
-place
-promotion
-product
-process
-physical evidence
-people
Process
-in order to deliver a service (cost effective) service firms need to manage their processes.
-process is element of the service marketing mix that looks at the systems used to deliver the service.
e.g. banks that sends out credit cards automatically.
Variability in the process
Challenge in designing services: potential heterogeneity (variability) in the process.
Possible sources of variability are service provider, the customer and the surroundings.
Customer variability in the process
Customers introduce variability in the process
-arrival variability
-request variability
-capability variability
-effort variability
-subjective preference variability
