In the past, marketing was considered to be predominantly about tangible goods and products. Services were regarded as exceptions to the general marketing, that of tangible goods. In advanced economies services are produced and exchanged more than tangible products. Thus, in the late 1970s the field of services marketing was developed, separating itself from the field of goods marketing (Gummesson, 2007). The main paradigm of services marketing is that services are different from tangible goods. They are distinguished on the basis of four unique characteristics – intangibility, inseparability of production and consumption, heterogeneity, and perishability. These were identified in their most common form in Zeithaml et al.’s (1985) review of the services marketing literature. Although there are other characteristics of services suggested in the literature, these four are the most cited ones (Edvardsson et al., 2005). There is a huge debate concerning the effectiveness of the four unique characteristics in differentiating services from goods. However, they are widely accepted by scholars and marketers as the most important characteristics of services (Wolak et al., 1998). I will now discuss each of the unique characteristics of services, some of the problems that they pose for marketers and some possible marketing solutions.
Intangibility is considered to be a key characteristic of services and the most important difference between goods and services, from which all other differences emerge (Zeithaml et al., 1985). In comparison to goods that possess physical properties that can be tasted, touched, felt, and seen prior to the consumer’s purchase decision, services lack such properties and so they cannot be sensed prior to the purchase. Services are performances rather than objects or things. Thus, they are intangible (Zeithaml et al, 1985). Services entitle the consumer to an experience and this experience cannot result in an ownership (Edgett and Parkinson, 1993). Moreover, services are subjectively evaluated, both before purchase and after consumption (Jobber, 2007). The intangibility of services causes some problems for marketers. For example, services cannot be patented and thus create problems for new product development (Zeithaml et al., 1985). Moreover, they cannot be easily displayed, communicated or priced. This is why marketers often use tangible clues, such as physical facilities or employees, to help customers evaluate the service before purchase (Edgett and Parkinson, 1993). Marketers could also stimulate the use of word-of-mouth communication in order to create a strong organizational image (Zeithaml et al., 1985).
Inseparability involves the simultaneous production and consumption which characterizes most services. While goods are first produced, then sold and finally consumed, services are often sold, produced and consumed simultaneously (Zeithaml et al., 1985). Thus, production and consumption are inseparable. The customer should be present during the production of many services and play an active role in the service development process (Keh and Pang, 2010). Also, the service provider is involved in the production process and plays a very important role for the satisfaction of the customer. This notion of the inseparability of production and consumption promoted the idea of relationship marketing in services as managing the interaction between the customer and the provider is very important for effective marketing. The selection, training, and rewarding of personnel who are the service providers is very important for achieving high standards of service quality. In addition to this, service providers should also be trained to avoid or manage inter-customer conflicts as the consumption of the service may take place in the presence of other customers who share their experiences (Jobber, 2007).
Heterogeneity reflects the potential for high variability in the output of services (Zeithaml et al., 1985). This is particularly problematic when the service is labor-intensive as its performance and quality vary depending on the producer. Moreover, different quality can be delivered by the same producer depending on the customer, the time and some other factors (Zeithaml et al., 1985). This leads to difficulty in achieving standardization and quality control in services, and results in a greater perceived risk by customers when purchasing services in comparison to purchasing goods (Edgett and Parkinson, 1993). The potential for high variability in service quality emphasizes the need for careful selection, training, and rewarding of staff in service organizations in order to increase consistency and reliability. Evaluation systems should be developed that allow customers to report on their experiences with staff (Zeithaml et al., 1985). Moreover, adopting uniform production procedures and developing internal marketing to promote service quality could lead to greater consistency (Edgett and Parkinson, 1993). The use of reliable equipment and technology rather than human labor could also help in achieving standardization (Jobber, 2007).
Perishability means that services cannot be inventoried and saved for use in the future (Zeithaml et al., 1985). Services are performances that cannot be stored. They should be consumed when they are produced (Edgett and Parkinson, 1993). For example, a hotel room that is not occupied for the day could not be saved and does not generate revenue during that day. If a service is not used when available, then the service capacity is lost (Edgett and Parkinson, 1993). On the other hand, the hotel cannot supply hotel rooms for its customers when it is fully occupied. Thus, the hardest task of services organizations is to match supply and demand (Zeithaml et al., 1985). Sometimes demand exceeds maximum available supply or demand exceeds optimum supply level. Some of the possible strategies to match supply and demand include different pricing according to the peak period, developing non-peak demand, developing reservation systems and complementary services, utilizing part-time employees or third-parties, sharing capacity, preparing in advance for expansion, etc. (Zeithaml et al., 1985).
The four unique characteristics of services appear to have almost universal and unquestioned approval from the marketing scholars and are repeated in almost all contexts without any discussion of the underlying logic (Vargo and Lusch, 2004). However, these characteristics have not been empirically or theoretically tested. Rather they are based on practical experience and observations (Edvardsson et al., 2005). Moreover, there are a lot of examples that prove that the four unique characteristics of services fail to adequately and uniformly distinguish them from tangible goods (Lovelock and Gummesson, 2004). I will now discuss some of the exceptions to the four characteristics of services.
Services are characterized by intangibility because they lack physical properties that can be sensed and so they cannot be evaluated before the purchase. Although the concept of intangibility is sometimes useful, it cannot be universally applied to all services during all stages of the service delivery (Lovelock and Gummesson, 2004). For example, some services involve delivering tangible elements. According to Bitner (1992), in addition to the social environment consisting of the service providers and the other customers, service experiences are also surrounded by a built environment, consisting of the appearance of physical facilities, equipment, personnel, and communication materials. One example of a service that involves tangible elements is the hotel service, whose main element – the room – is tangible. Thus, customers can evaluate the hotel room before they pay for the service. They could also evaluate the hotel building, its facilities, the appearance of the employees, their attitude, the other guests of the hotel and so on. Customers could specifically prefer an expensive service evaluated on the basis of the availability of superior tangible elements, such as a more elegant and better equipped hotel room (Lovelock and Gummesson, 2004). Beaven and Scotti (1990) claim that services cannot be intangible because they result in tangible results. There are a lot of services that involve tangible processes and tangible outcomes that customers experience through their senses during the delivery of the service. Staying in a hotel is an experience that could also be sensed through one or more of the customer’s five senses. Another example of such service is having a haircut or another beauty treatment. These services result in physical outcomes – new haircut, physical well-being, etc. (Lovelock and Gummesson, 2004). Gummesson (2007) gives an even more serious example, showing the tangibility of some services – having a surgery at the hospital. A lot of services result in tangible outcomes not just for the customers, but also for their possessions. Examples include repair and maintenance services, cleaning and laundry services, etc. They result in tangible outcomes such as a repaired car, a clean house, clean clothes, etc. (Lovelock and Gummesson, 2004).
Inseparability involves the simultaneous production and consumption which characterizes most services. For a long time inseparability has been considered one of the most defining characteristics of services (Keh and Pang, 2010). However, despite the claim that the production and consumption of services are inseparable processes, there are a lot of services whose production and consumption are not simultaneous. They do not require the presence and the participation of the customer in the service development process (Lovelock and Gummesson, 2004). Such services are freight transportation, warehousing, laundry, cleaning, landscaping, and repair or maintenance of equipment and facilities. These services are performed in the customer’s absence as by purchasing them customers avoid on purpose performing or being involved in such tasks. They are willing to pay money to save time and effort and to have a specialist do the task better than they would (Lovelock and Gummesson, 2004). These services are deliberately separated and are produced only in the absence of customers. They are performed either at a different location or sometimes they are scheduled when the customer is not around. Although there may be some initial collaboration between the customer and the service provider when placing the order and paying, the customer is not involved in the production process. Leaving an item or giving instructions to the service provider does not involve participation of the customer in the actual production of the service. Moreover, consumption of the benefits of these services can only appear some time after production has been completed. In some cases, consumption of benefits actually precedes production (Lovelock and Gummesson, 2004). For example, in banking services when a customer pays a bill by writing a check that may not be processed until several days later. There are also other services where customers are often absent during production, such as internet banking, accounting, insurance and research (Keh and Pang, 2010). Other examples can be found in entertainment, educational, and information services. Advances in information technology and telecommunications, such as the Internet, make it possible to separate the customers from the production of many information-based services. For example, services such as home entertainment and self-study education could be pre-recorded for use in a different location and at a different time so the customers do not need to be involved in their production (Lovelock and Gummesson, 2004). All these examples show that for some services the consumption is entirely separable from the production process and so inseparability cannot be considered a distinctive characteristic of all services.
Services are considered heterogeneous mainly because it is difficult to achieve uniform output, especially in labor-intensive services. There is a challenge of establishing standards when there is a variability in behavior and performance among service workers, and even among the same worker with different customers and from day to day. However, this is not the case in machine-intensive services in comparison to labor-intensive services, as the use of equipment and technology eliminates physical factors that cause variations. The use of reliable equipment and technology rather than human labor makes it possible to achieve high degrees of reliability and standardization (Jobber, 2007). Improvements in service quality and automation help in achieving homogeneity in the delivery of services such as freight transportation, house painting, oil changing for cars, dry cleaning of clothes, and warehousing of standardized parts (Lovelock and Gummesson, 2004). Banks have also reduced the heterogeneity of its services by providing automated teller machines. Homogeneity could also be achieved in services, such as entertainment and education. They can be delivered and redelivered many times without variations with the help of prerecorded performances. When a media station such as radio or TV broadcasts a program, it can be delivered in exactly the same way to each member of the audience (Lovelock and Gummesson, 2004). Moreover, there are many standardized services, such as banking and transportation, which represent a strategy of mass customization, in which customers make selections from a variety of customized modules to create the service package that best suits their needs (Vargo and Lusch, 2004). For example, scheduled airline service is highly standardized in design but it offers different customized modules, such as alternative schedules, service to and from different airports, different classes and prices, seat location, and a selection of drinks, food, and other amenities (Lovelock and Gummesson, 2004). Some hotel and restaurant chains also have standard offerings and thus have ensured uniform service and quality for the customers. McDonald’s in an example of consistency. Such restaurant chains have standardized preparation procedures and menus and could offer high consistency to their customers all around the world.
Perishability is a characteristic of services, meaning that they cannot be inventoried for future use and that they should be consumed when they are produced. However, there are important exceptions to this characteristic of services. Services could also be inventoried – in machines and buildings (Lovelock and Gummesson, 2004). The automated teller machine is a store of cash. The hotel building is a store of rooms while the restaurant building is a store of tables. These could be stored before purchase or consumption. However, they cannot be stored after production. Services could also be inventoried in knowledge and people (Lovelock and Gummesson, 2004). Educational service is an example of this. Students store the knowledge they gained in university for life. Some information-based services could be inventoried in systems. These are educational, entertainment, information, and religious services (Lovelock and Gummesson, 2004). They could be inventoried by recording the live performances for later reuse through broadcasting or by transforming them into a reusable good in the form of CDs, DVDs, tapes, or other storage media for later resale. In these cases, the producer’s output is highly durable and replicable, and the customer can enjoy the performance over and over again. The concept of perishability of services has been even more questioned with the advances in information technology and communications.
The four unique characteristics of services have been considered an underlying paradigm of services marketing for many years. However, recently, their validity has been questioned. Scholars claim that these characteristics do not distinguish services from tangible goods (Fisk et al., 2000). As it was shown in the analysis above, these characteristics are not applicable to all services. They apply only to some services. It cannot be said that all services have each of the four characteristics. Thus, these characteristics are not generic. Moreover, many of the services even possess the opposite characteristics – tangibility, separability, homogeneity and durability. Moreover, the field of services marketing has expanded and there have been major changes in the sector, which have blurred its boundaries. The characteristics of services could also be considered outdated due to the development of technology, especially the use of the Internet (Edvardsson et al., 2005). Technology plays a major role in changing the direction of services marketing. It changes the way services are communicated, sold, and delivered (Fisk et al., 2000). For example, replacing human labor by technology, equipment and quality improvement systems has greatly reduced the heterogeneity of services output. The notion of inseparability and perishability of services has also been questioned because of the advanced in technology and communications, such as the Internet and digital video and audio. The findings that the four characteristics of services are not generic to all services and situations have some implications for marketing. Fisk et al. (2000) suggest that maybe it is time to abandon the field of services marketing and integrate it with general marketing. However, the four characteristics of services are still applicable to some service categories and situations. Thus, another option for the development of services marketing is to distinguish among different types of services and not to look at services as a general category. The characteristics could still be applied to some services and situations when they are relevant and useful (Edvardsson et al., 2005). Another option for services marketing is to develop new characteristics of services that completely distinguish services from tangible goods so that the field of services marketing could be preserved and could remain relevant (Fisk et al., 2000). A lot of scholars are trying to achieve this and are searching for a new paradigm of services marketing. Fisk et al. (2000) suggest several preferred directions of services marketing that could be followed. However, the scope and the future of services marketing are still unclear.
The field of services marketing was developed in the late 1970s in order to distinguish marketing of services from general marketing. Until recently, the main idea of services marketing was that services are different from tangible goods. The four unique characteristics of services were widely accepted among scholars and marketers. However, in recent years, some scholars started to question these universal characteristics of service as they have not been empirically or theoretically tested. Moreover, there are so many examples of exceptions to these characteristics that they cannot be generalized to all services and contexts. The concept of the four unique characteristics of services is becoming even more inaccurate with the changes in the field and the advances in technology and communications. Thus, the field of services marketing needs a new paradigm so that it could remain relevant in the future, as well.
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