Introduction to Service sector Mgt
What are services?
Definition and meaning
Services are the non-physical, intangible parts of our
economy, as opposed to goods , which we can touch
or handle.
Services include all economic activities whose
output is not a physical product or construction,
is generally consumed at the time it is produced and
provides added value in forms (such as
convenience, timeliness, comfort or
health).That is essentially intangible concerns of its
first purchaser .

Examples of Services
Services include
Banking,
Education,
Medical treatment
Provision of Internet , electricity , Renting , and
transportation make up the majority of the
economies of the rich nations. They also
represent most of the emerging nations’
economies.

Definition of services
Service businesses are those that provide an
activity or the performance of a task with a
commercial purpose. This task is directed to
help a business or an individual in subjects
such as consulting, accounting,
transportation, cleaning, hospitality, traveling
or maintenance, among others.

Definition of Services
A service is an act of performance that one
party can offer to another that is essentially
intangible and does not result in the ownership
of anything. Its production may or may not be
tied to a physical product.”
- Philip Kotler

Service as part of Economy
The three-sector model in economics divides
economies into three sectors of activity:
1-Extraction of raw materials (primary),
2-Manufacturing (secondary),
3-and service industries which exist to facilitate
the transport, distribution and sale of goods
produced in the secondary sector (tertiary).

Characteristics of Services
The main Characteristics of Services are :
Intangibility
Inseparability
Heterogeneity
Perishability

Intangibility
Services are intangible in nature .Due to this
it is not possible to stock services and
hence fluctuations in demand becomes
difficult to manage.
These cannot be readily displayed or
easily communicated, and hence it will be
difficult for the consumers to assess the
quality .

Inseparability
 Services are also inseparable because Services
 and their providers are associated closely
and thus, not separable.
 A service is produced when it is consumed.
 The customers are present when the service
is produced thus other customer play an
important role in satisfaction.
 Eg doctor and his service cannot be separated as
teacher and his service cannot be separated .
Masons , Mechanics , hotels , travel agencies ,
electric providers , internet providers , taxis and
others are inseparable services .

Heterogeneity
As services are produced by humans, hence no
two services can be identical. Further no two
customers are precisely alike and hence their
experiences of the same service are different.
Even the same customer can be with different
frame of mind at different times – which results in
differing satisfactions from the same service at
different times.

Perishability
Services are perishable since they are consumed at the
time of production .
Services cannot be stored, saved, resold or returned. A
bad haircut cannot be returned or resold to another
customer . Hence demand forecasting and
creative planning to meet the demand is a
problem. Further one has to be right the first
time or if things go wrong one should have
strong recovery strategies to retain the customer
goodwill. Due to these characteristics of
services the marketers face a major challenge in
marketing of Services.

Importance of Service sector
The service sector makes an important
contribution to GDP in most countries,
providing jobs, inputs and public services for
the economy. Trade in services can improve
economic performance and provide a range of
traditional and new export opportunities.

Comparison between services& goods
Basis of Comparison Goods Services
Nature Tangible Intangible
Transfer of Ownership Possible Not Possible
Separable Goods can be separated from
the seller
Services cannot be separated
from the service provider
Storage Goods can be stored Services cannot be stored
Perishable Not all goods are perishable Services are perishable
Production and Consumption Goods have a significant time
gap between production and
consumption
Services are produced and
consumed together

Comparison b/w service and customer
service
Services are produced by companies and
individuals for sale such as training services ,
teaching services , repair and maintenance ,
consultancy and etc. but customer service is not
service for sale but in support of company’s care
product like answering customer question ,
taking orders , dealing with billing issue ,
handling complaints and etc.

Service Marketing
Perception of service marketing focuses on
selling the services in the best interest of
users/customers . Marketing a service is meant
marketing something intangible . It is
marketing a promise and more selling your self.
It is managerial process of managing the
services .
It is an organized effort for providing a sound
foundation for the development of the
organization .

Lesson Summary
This lesson has summarized an
introduction to service management such
definition of service , characteristics of
service , importance of service sector ,
comparison of service and goods and
difference between service and service
marketing .