Chapter 11 Summary

The number of services offered is growing at astounding rates. The service sector now accounts for a greater share of gross national product than does goods. This same growth rate is being seen throughout the world. Reasons for this growth are because demand by consumers and firms has increased and new technology has made services more available.

Services have certain characteristics that distinguish them from goods. First they often involve an ongoing personal relationship (client relationship). Second, services are perishable. If not used at the time offered, they disappear. The third characteristic is intangibility, i.e., customers cannot own the service, they simply have memories of what happen. Fourth, services are inseparable in that the service cannot be separated from the person offering them (doctor, lawyer, accountant). Customer effort is the fifth characteristic. This means that the customer may be involved in the production of the service. The final characteristic is uniformity indicating that services vary in quality and delivery. This is because of the customization of services.

Services can be equipment-based orn people-based. In other words, the service can be delivered with equipment (movies and travel by air, road). People-based delivery can include services provided by accountants, counselors, lawyers, and the like.

As with goods, services use the same four marketing mix elements (price, product [service], promotion, and place) but in a different manner. Service normally revolves around quality and how it is measured. In evaluating service quality, customer criteria are the tangibles of the service: its reliability, the responsiveness of providers, assurances from the providers regarding the quality of the service, and empathy referring to the providers ability to understand customer needs and wants. In pricing, terms like rents, tolls, commissions, fees, and fares are used. As with goods, the purpose of service pricing is to cover costs and generate profit. In some cases, service pricing could move to off-peak pricing. In this case, prices are set to reduce excess capacity of change demand requirements. Place or distributing services can range from the customer coming to the provider (doctor), the provider to the customer (insurance), or even using the mail or internet. The final mix element, promotion, is challenging for the provider. Because no physical product can be promoted, it is communication about the service that is conveyed (think of airline service, stockbroker service, and even hospital service).

In the normal sense, consumers think of services being provided by profit-oriented firms. Yet there are a huge number of organizations that also provide services without profit as a motive. The Red Cross, churches, museums are but a few of "nonprofit" firms. Government agencies also provide public services such as highway and street maintenance, police departments, libraries, and others. Political groups also offer services to the general public like campaign volunteers, and groups sponsors for presidential debates.