MNM3713
Service Marketing
Study Unit One
Introduction to services marketing
1.1 Importance of services in the delivery of need-satisfying products
A. Introduction
Service can be defined as any act or performance that one party can offer to another that is essentially
intangible and does not result in ownership of anything. Service can be a deed, a process or performance.
Providers of tangible products have a service element in their total product offering. Most do not have this
offering and is described as “pure service”.
Examples of Pure service: customer convenience, amusement, entertainment, comfort and health.
1.2 Nature of services and services marketing
A. Characteristics – First Perspective
Intangibility
- Main aspect to determine between a service and a physical product.
- Products are mostly tangible as they can be tasted, felt, smelled, stored or seen prior to purchase.
Marketing implications
- It is not difficult to patent products. Process of production can be patented but not the service
- Intangible services cannot be demonstrated or illustrated to a potential buyer prior to purchase
- Pricing is more complicated issue in service marketing than in tangible products as the primary cost is
labour
- Branding is easier
- Services are perceived as a riskier purchase than a physical product
Inseparability
- Reflects the join between the service provider delivering and customer receiving it
- Such services require the physical presence of the service provider and the presence of the customer
during the service encounter
- Service encounter reflects the satisfaction from the customer
Heterogeneity
- Refers to the variations in the experiences that may occur between the different services
- Human involvement in service delivery, service standardisation and quality control may be difficult to
achieve
- Quality control measure for tangible products are easier than for services
Perishability
- Major difference is that services cannot be stored and used later
- This is influenced by demand and supply
Lack of ownership
- Combination of intangible, inseparable, heterogeneity and perishable
- Customer can purchase the right to a service process and this may often involve a legal transaction, but no
physical transfer of ownership
Classification of services
- Can be grouped into Equipment-based and People-based
- Depends on the involvement, skills and operations involved in the service delivery process
Equipment-based
- Automated (car wash, vending machine)
- Unskilled operators (taxis, cinemas)
- Skilled operators (airline pilots)
People-based
- Unskilled labour (gardening services, security guards)
- Skilled labour (artisans – electricians, plumbers)
- Professionals (accountants, medical doctors)
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, B. Service levels – Second perspective
Pure tangible products
- These products have a small service component
- Basic industrial goods, such as chemicals, raw materials, basic engine parts, lubricants and builders’
supplies have a very small service component rendered by their suppliers.
Tangible products with peripheral services
- The physical product is what the consumer actually buys and the services that are provided contribute to
the proper working of the physical product
- Most buyers of motor cars expect the dealer to provide an extended warranty and service plan as a
standard part of the “package” when it is purchased
- The service plan would, however, not be the reason that a customer would choose one brand over another.
A physical product with an integral service component
- Product/service package is known as a hybrid product
- An example would be a highly technical and vital electronic component used in an aeroplane. The support
of the supplier of this product is required to ensure that the product is correctly installed and serviced over
the lifetime of the aeroplane.
A pure service product with peripheral physical components
- There is hardly any physical feature attached to the product
- Degrees offered by Unisa, the care of a medical doctor or a hospital, a computer program, the advice of an
insurance salesperson, a savings account at Absa and an airline flight are all pure service products.
C. Traditional product concept - Third perspective
- Product was seen as comprising four distinguishable layers, namely the core product, the real product, the
augmented product and the product image
1.3 Service marketing mix or Service value mix
ADD PAGE 8 FROM SG
Key strategic areas of the additional value mix
- Process: refers to procedures, mechanisms and flow of activities and operations by which the service is
delivered
- People: aspects of employee involvement in the service delivery, includes interactions with customers,
employee recruitment, training, motivation and rewards
- Physical environment: where services are delivered and customers interact during the service encounter.
Includes facility design, equipment, signage, annual reports, guarantees, business cards and financial
statements
Page 2 of 56
Service Marketing
Study Unit One
Introduction to services marketing
1.1 Importance of services in the delivery of need-satisfying products
A. Introduction
Service can be defined as any act or performance that one party can offer to another that is essentially
intangible and does not result in ownership of anything. Service can be a deed, a process or performance.
Providers of tangible products have a service element in their total product offering. Most do not have this
offering and is described as “pure service”.
Examples of Pure service: customer convenience, amusement, entertainment, comfort and health.
1.2 Nature of services and services marketing
A. Characteristics – First Perspective
Intangibility
- Main aspect to determine between a service and a physical product.
- Products are mostly tangible as they can be tasted, felt, smelled, stored or seen prior to purchase.
Marketing implications
- It is not difficult to patent products. Process of production can be patented but not the service
- Intangible services cannot be demonstrated or illustrated to a potential buyer prior to purchase
- Pricing is more complicated issue in service marketing than in tangible products as the primary cost is
labour
- Branding is easier
- Services are perceived as a riskier purchase than a physical product
Inseparability
- Reflects the join between the service provider delivering and customer receiving it
- Such services require the physical presence of the service provider and the presence of the customer
during the service encounter
- Service encounter reflects the satisfaction from the customer
Heterogeneity
- Refers to the variations in the experiences that may occur between the different services
- Human involvement in service delivery, service standardisation and quality control may be difficult to
achieve
- Quality control measure for tangible products are easier than for services
Perishability
- Major difference is that services cannot be stored and used later
- This is influenced by demand and supply
Lack of ownership
- Combination of intangible, inseparable, heterogeneity and perishable
- Customer can purchase the right to a service process and this may often involve a legal transaction, but no
physical transfer of ownership
Classification of services
- Can be grouped into Equipment-based and People-based
- Depends on the involvement, skills and operations involved in the service delivery process
Equipment-based
- Automated (car wash, vending machine)
- Unskilled operators (taxis, cinemas)
- Skilled operators (airline pilots)
People-based
- Unskilled labour (gardening services, security guards)
- Skilled labour (artisans – electricians, plumbers)
- Professionals (accountants, medical doctors)
Page 1 of 56
, B. Service levels – Second perspective
Pure tangible products
- These products have a small service component
- Basic industrial goods, such as chemicals, raw materials, basic engine parts, lubricants and builders’
supplies have a very small service component rendered by their suppliers.
Tangible products with peripheral services
- The physical product is what the consumer actually buys and the services that are provided contribute to
the proper working of the physical product
- Most buyers of motor cars expect the dealer to provide an extended warranty and service plan as a
standard part of the “package” when it is purchased
- The service plan would, however, not be the reason that a customer would choose one brand over another.
A physical product with an integral service component
- Product/service package is known as a hybrid product
- An example would be a highly technical and vital electronic component used in an aeroplane. The support
of the supplier of this product is required to ensure that the product is correctly installed and serviced over
the lifetime of the aeroplane.
A pure service product with peripheral physical components
- There is hardly any physical feature attached to the product
- Degrees offered by Unisa, the care of a medical doctor or a hospital, a computer program, the advice of an
insurance salesperson, a savings account at Absa and an airline flight are all pure service products.
C. Traditional product concept - Third perspective
- Product was seen as comprising four distinguishable layers, namely the core product, the real product, the
augmented product and the product image
1.3 Service marketing mix or Service value mix
ADD PAGE 8 FROM SG
Key strategic areas of the additional value mix
- Process: refers to procedures, mechanisms and flow of activities and operations by which the service is
delivered
- People: aspects of employee involvement in the service delivery, includes interactions with customers,
employee recruitment, training, motivation and rewards
- Physical environment: where services are delivered and customers interact during the service encounter.
Includes facility design, equipment, signage, annual reports, guarantees, business cards and financial
statements
Page 2 of 56
