The service industry is the strongest growth and more people are employed in services than in all other sectors put together. Services have five important features that effect how they are managed and marketed.
The services provided are of a specialized nature, these arise from the * intangibility of the offering, * inseparability of production and consumption, * heterogeneity - the difficulty of achieving standardization * perishable nature of the service. * ownership - the lack of full use only have the service for a limited time.
Companies have developed new models of successful management practice.
Intangibility Unlike goods, services cannot be seen, touched, tasted or smelled. They are an experience or a process. This has a number of implications for the consumer and buyer. * Lack of physical qualities increases purchase risk - you can examine the shape, colour and features of a vehicle but you cannot do this with a haircut or an airplane ticket. * Quality of service can only be judged after it has been received - a repair on a vehicle. * Tangible clues gives perception of level of quality - appearance, staff and prices. * Lack of physical characteristics makes it difficult to display and differentiate the offering. * Impossible to patent services innovations - can be easily relocated by competitors.
To deal with these problems the following strategy should be undertaken: * Stimulating personal influence sources as word-of-mouth. This includes encouraging customers to recommend the service to their friends. * Developing tangible cues that suggest high quality service. These can include location, staff, equipment, advertising, and symbols to brand the firm.
Inseparability Services are normally produced and consumed at the same time. Such as a visit to the dentist, the dentist cannot fill the tooth without the customer being there. Several consequences follow: * The provider and consumer are both present and the interaction between the two are crucial in determining the level of satisfaction. * Other consumers are present such as queue at the bank - their behavior may affect the level of satisfaction gained. * Growth is difficult as the buyer and seller have to meet. The firm may have to set up many small units where the consumer is located. * Production and marketing cannot be separated * Service may require highly trained staff this may be a major barrier to growth.
The challenge is to find ways of leveraging these scarce resources to achieve high productivity. * Training staff to interact well with clients, teaching them to listen, empathize and behave courteously. * Looking for ways to prevent customers from embedding each other's satisfaction - separating smokers from non-smokers.
Growth can take place by: * Training more high quality staff * Larger facilities allowing larger numbers to be serviced * Faster working - streamlining non-essential work * Multi-site locations - franchising