SM: Session3: Service Classification, Characteristics and Triangle

Classification of Services

One of the better known service classification is come from the analysis of what is being processed. In some cases, customer’s presence is important as the service is processed on them, while in some other cases customer’s possessions are processed. Some services require a lot of input from customers and some are conducted with less or no input from customers. There are different level of participation also.  Christopher Lovelock has identified four broad categories of services – people processing, possession processing, mental stimulus processing and information processing. These categories are defined on a two dimensional matrix;

• Who or what is the direct recipient of the service
• Nature of the service act

People Processing

Common belief about services is that the services are directed to customers. Number of very popular services like airlines, beauty treatments, health care and hospitality are people processing where, to receive the service customer must enter the service operation. According to Lovelock, these service facilities are service factories, where production and consumption happens simultaneously. For such services, customers need to cooperate actively with the service operation and required to give more time and efforts

For effective marketing in people processing services, marketers should think about process and output from the customer’s perspective and needs to identify benefits created and non-financial costs: Time, mental and physical effort

Possession Processing

In such services, people’s possessions are processed. Services like car repairs, house cleaning, pest control, laundry are of such type where, production and consumption are separable. Customer involvement is limited as they explain the problem and drop off the item that requires repair or service.

In some cases like landscaping, servicing of heavy equipment, the service factory has to go to the customer. Usually there is a tangible enhancement to the item being processed

Mental Stimulus Processing

These are the services that interact with peoples mind like education, news and information, professional advice, psychotherapy, entertainment etc. These services can be ‘inventoried’ and can be easily converted into digital formats. Customer’s physical presence may not be required at the time of production.

Marketers should maintain ethical standards required and should not manipulate customers as core content of services is information-based.

Information Processing

This is the most intangible form of service. May be transformed into enduring forms of service output. It may be transformed into tangible forms represented by reports, books, tapes, disks. Strictly speaking personal contact is not needed in this case.

Examples of such services are, financial services, professional services like accounting, law, market research, management consulting, medical diagnosis etc.

Characteristics of Services

The very basic difference between services and physical products is that the very intangible nature of services. Service marketers face a number of challenges due intangibility and several other service characteristics that makes services different from physical goods.

Intangibility

As discussed, intangibility is a unique service characteristics. Most Services are experienced that cannot be seen. They can only be used. For example, a taxi ride or hotel stay. Marketers are very concerned about this aspect as it increases the customer perceived risk. Thus they provide number of physical evidences (also known as servicescape) to enhance the experience. The service environment covers up for intangibility and reduces the perceived risk.

According to Berry, Walls and Lewis, in interaction with services, customers consciously or unconsciously filter experience clues – something that customer perceived by its presence or absence. These clues are:

• Functional clues – technical quality of the offering – service reliability
• Mechanical clues – technical quality of the offering
• Humanic clues – behaviour and appearances of service providers.

Inseparability

Services are produced and consumed simultaneously and hence cannot be transferred from place of production to place of consumption. Some services like house cleaning, pest control and some medical and nursing service comes at customers door step, but they last only till the service provider is present.

To overcome such limitations, service firms can offer its customer some tangible clues like souvenir and gifts. McDonald’s Happy Meal toys are very popular amongst children. Jet airways gives miniature aircraft toy to children traveling with them. Some beauty parlours, gives a gift hamper. Hotels in Goa give a local wine bottle as souvenir to its customers.

Variability

In services, human element plays an important role. Service quality is based on performance of service employees. Due to this human element, services cannot be standardised. There is always variability from one service product to other. To deal with this issue, service firms can;

• Standardise the repetitive process.
• Invest in technology to enable standardization
• Train employees using hard measures of service quality
• Offer service guarantees to reduce customer perceived risk.

Perishability

Since services are intangible, they cannot be stored for future consumption. Most services are actions, performances and an experience that lasts only till the services is delivered. Service product is essentially intangible (though in some cases some services include use of physical products like meals in restaurant), thus perish after consumption.

Service firms need to manage demand and supply by create rate fences and buckets and by using differential pricing.

Lack of ownership

Since services are perishable and inseparable, customers do not own anything but avail an experience only. The implication is that the customers feel hesitant to spend a big amount as it does not accumulate as a wealth like in case of many physical products. To overcome this limitation service marketers stress on advantages of services and encourage customers to spend by providing easy payment schemes, offers and discounts.

The Service Triangle

The 3 vertices of the triangle are the company, customers and the providers (employees). The sides joining these vertices are external marketing, internal marketing and interactive marketing.

External Marketing Efforts

This is about making promises, i.e., efforts the firm engages in to set up its customer’s expectation and makes promises to customers regarding what is to be delivered.

Interactive Marketing

This is about keeping promises. Here is where the promises are kept or broken by the firm’s employees or agents.

Internal Marketing

This tangent is enabling promises, i.e. the activities firm engages in to aid the providers in their ability to deliver on the service: recruiting, training, motivating, rewarding and providing equipment and technology.