Are Services Different??

Services are processes consisting of a series of activities that take place before, during and after interactions between the customer and provider.

There are really two basic views about what a service is:

  • the common but probably outdated one based on the concept that services are different; and
  • a newer view, based on the opposite concept – that is services are common to all products.

Are services different (?)

The first view is one that was developed around the work of G. Lynne Shostack who produced an article in 1977 “Breaking Free from Product Marketing”.  The article presented the view that services are significantly different from products.  It suggested that the practice of marketing of services using the framework developed for tangible products (goods) has limited thinking about services marketing.

Shostack [1] argued that services’ marketing requires a different approach and different concepts compared with goods’ marketing.  She developed a model called the ‘Product-Service Continuum’

This model suggests that there are two opposite and distinct points on a continuum of value offers – Pure Intangibles (services) and Pure Tangibles (goods).

Despite its apparent limitations, this model is still widely in use.  It is hard to understand how any product can exist without a combination of both tangibles (goods) and intangibles (labour and services).  Using the above model, the concept that salt is pure product does not address service activities (such as marketing – packaging, labelling, distribution, branding, promotion) that are required to offer it as a saleable product.  The same is true of “pure service” like the haircut which requires goods and other tangibles (scissors, salon hairdresser) to the make the service available.  How could a service be exchanged without some form of tangibility?  None the less many writers want to persist with this concept, although most now agree that the bulk of value offers are a combination of both.  Nor does the Shostack concept have any support in standard economic theory.

The newer view

More recent writers (for example Christian Gronroos and Edvard Gummerson) question the validity and practicality of the previous attempts at goods/services differentiation.

Christian Gronroos [2] believes that traditional services marketing has little to offer organisations even in the service sector and that the view of services as something provided only by a certain type of organisation is probably an outdated one, which limits understanding and usefulness. It gives the wrong signal about the importance of services in all situations and about the impact of services competitiveness.

Edvard Gummerson[3] states “there is no practical advantage in continuing to try to define services in a separate way”

I [4] suggested in 1995 that all products are essentially services provided with tangibles to affect the delivery of value.

The basis of this concept is that the main benefits (from a buyer/user perspective) of any product are the intangible ones – services the product provides or services attached to the product.   These provide the satisfaction and value sought in the marketing exchange.  Basically what the tangible product factors provide is the vehicle for the intangible satisfactions.

All products are largely service (intangible value) based

It seems logical that services are not something different or separate from a product or a different class of products.  Customers do not buy products or services – (goods or services); they buy the entire value offer the (mostly intangible) benefits all products provide them with.’ They buy offerings consisting of goods, services, information, image, personal attention and other components. Such offerings provide benefits by way of services to them.  It is this customer-perceived benefit/service of an offering that creates value for buyers and users. In the final analysis organisations always offer a service to customers, regardless of what they produce. (Gronroos [5])

The value of goods and services to customers is produced both in factories and in the back offices of service organisations, in service delivery encounters as well as when users make use of the product they have purchased.

It is essentially impossible to provide or receive something of value without some tangible element involved, eg labor, packaging, equipment. Consider an advice based service, financial planning, legal advice, insurance quote, no physical object changes hands. For financial and legal advice the service provider had to undergo training to gain the necessary qualification, then had to research the specific needs of the consumer (labour), and may even provide the consumer with a typed report. Often when consulting an expert for advice a consumer would visit the firms premises (capital/land/building), sit on a chair in a meeting or waiting room (equipment).

No tangible product changes hands between the producer and consumer, however tangible factors of production, land, labor, equipment are involved and used by the consumer.

From Marketing in Black and White – Brian Monger – Published by Pearsons.  Digital copies available – http://www.marketing.org.au

[1] Shostack, G.L.  Breaking Free from Product Marketing. American Marketing Association.   Journal of Marketing, April 1977

[2] Gronroos. (1989a): Defining Marketing: A Market-Oriented Approach.  European Journal of Marketing, No. 1

[3] Gummerson (1990): Organizing for Marketing and Marketing Organisations.  In Congram, C.A. & Friedman, M.L., eds., Handbook of Services Marketing. New York: AMACON

[4] Monger, B., (1995) Service as the Product; Marketing World  London

[5] Gronroos C., Service Management and Marketing.  Wiley 2000

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