The characteristic of a service that refers to differences in employees performances is:

Six key distinguishing characteristics of services are as follows: a. Intangibility b. Inseparability c. Variability d. Perishability e. Heterogeneity f. Lack of Ownership.

1. Intangibility:

Services cannot generally be seen, tasted, felt, heard or smelt before being bought. The potential customer is unable to perceive the service before (and sometimes during and after) the service delivery. For many customers of car repair, for example the service is totally intangible – they often cannot see what is being done and many indeed are unable to evaluate what has been done.

Implications:

Intangibility presents problems in that consumer may experience difficulty in knowing and understanding what is on offer before, and even after, receipt of the service. The challenge for the service provider is to determine the extent of intangibility and the management action required to make the service more tangible (Figure 2.2). The first task implies resort to some form of measurement, and the second task involves the provision of tangible evidence, e.g. a brochure to help consumer understanding of the service.

Pure services have no tangible properties which can be used by consumers to verify advertising claims before the purchase is made. The intangible process characteristics which define services, such as reliability, personal care, attentiveness of staff, their friendliness, etc., can only be verified once a service has been purchased and consumed.

Intangibility has a number of important marketing implications. The lack of physical evidence that intangibility implies increases the level of uncertainty which a consumer faces when choosing between competing services.

An important part of a services marketing programme will therefore involve reducing consumer uncertainty by such means as adding physical evidence and the development of strong brands. It is interesting to note that pure goods and pure services tend to move in opposite directions in terms of their general approach to the issue of tangibility. While service marketers seek to add tangible evidence to their product, pure goods marketers often seek to augment their products by adding intangible elements such as after-sales service and improved distribution.

Evidence Creation:

The ability to picture a service may be assisted by the service organization providing something tangible. This may be in the form of tangible evidence, e.g. computerized representation of hairstyles or a tangible possession, e.g. a university prospectus. The aim would be to help the potential customer form expectations before using the service. Equally, tangible evidence and possessions could assist customer judgment of the service during and after usage.

2. Inseparability:

There is a marked distinction between physical goods and services (Figure 2.3) in terms of the sequence of production and consumption.

Whereas goods are first produced, and then stored, and finally sold and consumed, services are first sold, then produced and consumed simultaneously. For the production of many services (e.g. counselling, museums, hairdressing, rail travel, hotels) the customer must be physically present.

Some services may be produced and delivered in circumstances where the customer’s presence is optional, e.g. carpet cleaning, plumbing. Other services may rely more on written communication, e.g. distance learning course, or on technology, e.g. home banking. Whatever the nature and extent of contact, the potential for inseparability of production and consumption remains.

Implications:

The involvement of the customer in the production and delivery of the service means that the service provider must exercise care in what is being produced and how it is produced. The latter task will be of particular significance. How teachers, doctors, bank tellers, lawyers, car mechanics, hairdressers conduct themselves in the presence of the customer may determine the likelihood of repeat business.

Therefore, proper selection and training of customer contact personnel are necessary to ensure the delivery of quality. The production and consumption of a tangible good are two discrete activities. Companies usually produce goods in one central location and then transport them to the place where customers most want to buy them. In this way, manufacturing companies can achieve economies of scale through centralized production and have centralised quality-control checks.

The manufacturer is also able to make goods at a time which is convenient to itself, and then make them available to customers at times which are convenient for them. Production and consumption are said to be separable.

On the other hand, the consumption of a service is said to be inseparable from its means of production. Producer and consumer must normally interact in order for the benefits of the service to be realized – both must meet at a time and a place which is mutually convenient in order that the producer can directly pass on service benefits.

In the extreme case of personal care services, the customer must be present during the entire production process – a doctor cannot provide a service without the involvement of a patient. For services, marketing becomes a means of facilitating complex producer – consumer interaction, rather than being merely an exchange medium.

Inseparability occurs whether the producer is human, as in healthcare services, or a machine, as in the case of a bank ATM machine. The service of the ATM machine can only be realized if the producer and consumer interact. In some cases, it has been possible to separate service production and consumption, especially where there is little need for personal contact.

Inseparability has a number of important marketing implications for services (Figure 2.4). First, whereas goods are generally first produced, then offered for sale and finally sold and consumed, inseparability causes this process to be modified for services. These are generally sold first, then produced and consumed simultaneously. Second, while the method of goods production is to a large extent (though by no means always) of little importance to the consumer, production processes are critical to the enjoyment of services.

Some implications of service inseparability:

3. Variability:

An unavoidable consequence of simultaneous production and consumption is variability in performance of a service. The quality of the service may vary depending on who provides it, as well as when and how it is provided. One hotel provides a fast efficient service and another short distance away delivers a slow, inefficient service. Within a particular hotel, one employee is courteous and helpful while another is arrogant and obstructive. Even within one employee there can be variations in performance over the course of a day.

Implications:

Reducing variability involves determining the causes. It may be due to unsuitable personality traits in an employee which are very difficult to detect at the selection stage. There is nothing much that can be done about this except hope that the employee decides to terminate his employment. However, there may be good sound reasons for variations in performance. For example, it could be due to poor training and supervision, lack of communication and information and generally a lack of regular support.

Some have argued for a replacement of labour with automation and a production line approach to service operations. This would mean a reduction in employee discretion and an increase in standardization of procedures. The operation of pizza restaurants is put forward as an ideal model of vice industrialization.

For services, variability impacts upon customers in terms not just of outcomes but also of process of production. It is the latter point that causes variability to pose a much greater problem for services, compared to goods. Because customer are usually involved in the production process for a service at the same time as they consume it, it can be difficult to carry out monitoring and control to ensure consistent standards.

The opportunity for pre-delivery inspection and rejection which is open to the goods manufacturer is not normally possible with services-the service must normally be produced in the presence of the customer without the possibility of intervening quality control. Particular problems can occur where personnel are involved in providing services on a one-to-one basis-such as hairdressing – where no easy method of monitoring and control is possible.

The variability of service output can pose problems for brand building in services compared to tangible goods – for the latter it is usually relatively easy to incorporate monitoring and a quality control procedures into production processes in order to ensure that a brand stands for a consistency of output. It is often difficult to achieve standardization of output in services.

4. Perishability:

Services cannot be stored for later sale or use. Hotel rooms not occupied, air line seats not purchased, and college places not filled cannot be reclaimed. As services are performances they cannot be stored. If demand far exceeds supply it cannot be met, as in manufacturing, by taking goods from a warehouse. Equally, if capacity far exceeds demand, the revenue and/or value of that service is lost.

Implications:

Fluctuations in demand characterize service organizations and may pose problems where these fluctuations are unpredictable. Strategies need to be developed for producing a better match between supply and demand. Services differ from goods in that they cannot be stored. A producer of cars which is unable to sell all its output in the current period can carry forward stocks to sell in a subsequent one.

The only significant costs are storage, financing and the possibility of loss through obsolescence. In contrast, the producer of a service which cannot sell all is output produced; in the current period has no chance to carry it forward for sale in a subsequent one. An airline which offers seats on 9.00 a.m. flight from Mumbai to Delhi cannot sell any empty seats once the aircraft has left.

The service offer disappears and spare seats cannot be stored to meet a surge in demand which may occur at, say. 10.00 a.m. The perishability of services results in greater attention having to be paid to the management of demand by evening out peaks and troughs and in scheduling service production to follow this pattern as far as possible. Pricing and promotion are two of the tools commonly adopted to tackle this problem.

5. Heterogeneity:

Even though standard systems may be used, for example to handle a flight reservation, to book in a customer’s car for service or to quote for insurance on his life. Each ‘unit’ of a service may differ from other ‘units’. Franchise operations, attempt to ensure a standard of conformity, but ultimately it is difficult to ensure the same level of output in terms of quality. From the customers’ viewpoint too it is difficult to judge quality in advance of purchase; although this element also applies to some product marketing.

Capacity level should be available on cope with surges in demand before service levels suffer. Equally, attention has to be given in times of low levels of usage on whether spare capacity will lie idle or whether short-term policies (e.g. differential pricing, special promotions), will be adopted to even out fluctuations in demand. Some illustrations of programmes that may be adopted to compensate for fluctuating demand are shown in Table 2.2.

6. Lack of ownership:

Lack of ownership is a basic difference between a service industry and a product industry because a customer may only have access to or use of a facility (e.g. a hotel room, a credit card). Payment is for the use of, access to or hire of items. With the sale of a tangible good, barring restrictions imposed say by a hire purchase scheme, the buyer has full use of the product.

A summary of these characteristics of services with some implications is shown in Table 2.3.

Table 2.3: Some constraints on the management of services and ways of overcoming them: