As consumers, we use services every day. Turning on a light, watching TV, talking on the telephone, catching a bus, visiting the dentist, posting a letter, getting a haircut, refuelling a car, writing a cheque or sending clothes to the dry-cleaners are all examples of service consumption at the individual level.

Unfortunately, customers are not always happy with the quality and value of the services they receive. People complain about late deliveries, rude or incompetent personnel, inconvenient service hours, poor performance, needless complicated procedures and a host of other problems. They grumble about the difficulty of finding sales assistants to help them in shops, express frustration about mistakes on their credit card bills or bank statements, shake their heads over the complexity of new self-service equipment, mutter about poor value and sigh .. s they are forced to wait for service or stand in queues almost everywhere they go.

Suppliers of services often seem to have a very different set of concerns. Many complain about how difficult it is to make a profit, how hard it is to find skilled and motivated employees, or how difficult to please customers have become a hard-core problems. Some firms seem to believe that the surest route to financial success lies in cutting costs and eliminating ‘unnecessary frills’. A few even give the impression that they could run a much more efficient operation if it were not for all the stupid customers who keep making unreasonable demands.

Happily, in almost every field of endeavour there are service suppliers who know how to please their customers while also running a productive, profitable operation, staffed by pleasant and competent employees.



A service is an act or performance offered by one party to another. Although the process may be tied to a physical product, the performance is essentially intangible and does not normally result in ownership of any of the factors of production.

Services are economic activities that create value and provide benefits for customers at specific times and places, as a result of bringing about a desired change in or on behalf of the recipient of the service.

The American Marketing Association defines services as “Activities, benefits and satisfactions which are offered for sale or are provided in connection with the sale of goods.”

Service organisations range in size from huge international corporations like airlines, banking,insurance, telecommunications, hotel chains and freight transportation to a vast array of locally owned and operated small businesses,including restaurants, laundries, taxis, opticians and numerous business-to-business services.



There are five characteristics of a service:

  1. Lack of Ownership: When you buy a product you become its owner be it a pencil, book, shirt, refrigerator or a car. In the case of service, you may pay for its use but you never own it. You can not own a service and you can not store a service like you can store a product. Services are used or hired for a period of time. For example when you buy an aeroplane ticket to fly to the USA, you are buying a service which will start at the beginning of the flight and finish at the end of the flight. You can not take the aeroplane flight home with you.
  2. Intangibility: When you buy a cake or soap, you can see , feel , touch , smell and also check its effectiveness in cleaning. But when you pay fees for a term in college, you are paying for the benefit of deriving knowledge and education which is delivered to you by teachers. You cannot hold or touch a service unlike a product. This is because a service is something customers experience and experiences are not physical products.
  3. Inseparability: Services cannot be separated from service providers. A product can be taken away, from the producer but a service can not be taken away as it involves the service provider or its representatives doing something for the customer. For example, a company selling ironing services needs the company to iron the clothes for you.
  4. Perishability: Services last a specific time and cannot be stored like a product for later use. For example, an interior designer will design a property once. If you would like to redesign the house another time, you will need to purchase the service again.
  5. Heterogeneity: Firms have systems and procedures to ensure that they provide a consistent service but it is very difficult to make each service experience identical. For example, two identical plane journeys may feel different to the passengers due to circumstances beyond the airline’s control such as weather conditions or other passengers on the plane.



A classification of services is useful because of the great diversity of service institutions. If service marketers are to develop marketing strategies, they must know where their services fit in relation to competition and to consumers need.

Services in business can be categorised into two groups. The first category is products supported services. In this situation, the wide range of service elements that accompany the physical product are frequently as important as the technical solution offered by the product itself. The best example is that of consultancy services associated with the sales of computers and other technical products. The second category is pure services; those that are marketed in their own right without necessarily being associated with a physical product. These include insurance, consulting, banking, accounting and travel booking services.



Marketing strategy is a long-range plan that guides the efforts of all marketing personnel. Marketing strategies should not be confused with marketing goals. The marketing goal of an organization is to satisfy customers and other members of the public in exchange for a profit or acceptable revenue/cost ratio. The marketing strategy on the other hand, is a particular plan for achieving that goal. Two or more service firms might have identical marketing goals, but use different marketing strategies for reaching that goal. Therefore, marketing strategy is based upon goals.

The most successful organizations are those that take strategic marketing seriously and strive very hard to have competitive edge or advantage.

Marketing strategy is a single statement indicating the general route to the achievement of the objective sometimes. However, it is very specific and quantitative. Shaping marketing strategies for services, the marketers must often face a great number of choices and options, which if adopted will guarantee their success, these are:

  • The resources available need to be identified.
  • The competitors’ marketing strategies.
  • The competitive size of organization and position.
  • The coordination of the tactics into an integrated cohesive whole.
  • The character of the economy/environment.



It is a challenging task to manage a service or product industry. These challenges however are different and unique for each industry. Some of the challenges that are faced while managing, growing and making profit from a service industry are discussed below, these factors do not readily apply to the product industry.

  1. Services are intangible and so customers cannot see or hold them before they buy it. Buyers are therefore uncertain about the quality of service and feel they are taking a risk. The buyer is unable to conceptualize and evaluate a service beforehand. From the seller’s perspective he finds it challenging to promote, control quality and set the price of the service he provides. Unlike products the intangible nature of service causes difficulties to both client and the firm.
  2. Defining and improving quality in the service industry is a major challenge. Unlike products very often services are produced and consumed simultaneously. As a result service quality management faces challenges that the product industry has never come across. In the product industry the manufacturer gets ample opportunity to test his products before they reach the market. In case of a quality issue the problem is taken care of during the quality check and customer satisfaction is taken care of. However, during service production the customer is right in front. To guarantee customer satisfaction in this scenario is a major challenge.
  3. In the case of the service industry, the customer first needs to develop trust in the service organization before he buys their services. The client often gives more important attention to the amount of faith he has on the service organization than the services being offered and their value proposition.
  4. Service industry faces competition not only from fellow service industry but also from their clients who often question themselves whether or not they should engage a service at all.
  5. Most of the product companies have dedicated sales staff, while in the service industry the service deliverers often do the selling. Coordinating marketing, operations and human resource efforts is a tedious task.
  6. Passion works for the service industry. More of the passion, spirit and desire among the service staff is more on the revenue generation and success generated every day. There is a direct correlation between staff passion and financial success and similarly lack of passion leads to failure in the service industry. Staff members need to be constantly motivated and efforts have to be intensified to sustain employee commitment.
  7. While testing new services is a constant challenge, communicating about these services simultaneously is also not easy.
  8. Setting prices does not come easily for service industry.
  9. Standardization versus personalization is another major issue the service industry has to face.
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