A market structure providing services which do not involve industry or manufacture, for example catering, health, travel, retailing, entertainment, or education and the delivery of which includes a human factor. Services are the fastest growing in the developed world. Two-thirds of the GNP of the advanced economies is derived from services. Services markets are characterized by their heterogeneity: services can range from plastic surgery to travel reservations to hotels to outsourcing information technology services to leading a major law suit conducted on behalf of a major corporation. Services are also integral to products; there is a huge service sector dedicated to the care and maintenance of tangible products and physical assets such as janitorial functions, cleaning, storage, and maintenance. There are multiple services—business services—that happen within organizations that are not run as external businesses. There is a growing range of services that are moved from inside a company to be handled by external contractors—outsourcing services. The worldwide expansion of leasing, franchising and rentals business—from cars to aircraft to domestic appliances to fast food and personal care outlets—has added further growth. Deregulation of state-owned monopolies, utilities, and capital markets, most of which are service providers, caused a huge explosion in the competitive services market. Also, we are also seeing the early stages of globalization in services businesses, some enabled by the World Wide Web, which were once thought to be intensely local activities. Service marketing is now a major discipline in the overall marketing range of techniques and is radically different from product marketing. It came late to the marketing table, long after consumer goods, and a generation after industrial marketing. Professional services marketing was the latest entrant, following a period of restrictions, some self-imposed, upon the marketing of professional expertise. From the early 1980s onwards restrictions on advertising accountancy and legal, medical, optometry, architectural services were removed. Also, the entire field of services marketing has been broadened by the needs of the non-profit services, such as charities and public services, and of franchises, which are burgeoning worldwide.
Some areas of the services growth that have affected marketing are: the World Wide Web, which enables interactive marketing of services to customers; customer care centres; the greater involvement of customers in self service (such as personal banking and investment); and the massively increased ability to gather, store, and use customer information. In essence a service is a benefit that one party brings to another that is neither tangible nor separable, neither standardized nor storable. These characteristics determine the various mixes and approaches to marketing as well as setting new, non-traditional challenges. Service marketers are particularly challenged to make a service differentiated, often by linking it to tangible evidence of its outcome, to manage fluctuations in demand and to ensure good service delivery quality.
The following are characteristics of services:•intangibility Services disappear at the point of consumption and they cannot be possessed. Often the results are intangible, or at least not visible. Therefore, for services marketing the normal tools of promotion are not usable to create an abiding memory of the service brand: patenting is impossible and quality of delivery is variable because delivered mainly by people.•inseparability The production and the consumption of a service are usually simultaneous and inseparable (e.g. entertainment). Services are often sold before they are produced (e.g. travel). People usually deliver services, therefore direct selling and delivery is the only channel that can be used.•heterogeneity Because people largely deliver services, it is impossible to standardize them; there are multiple variances in the type and the delivery of service. Marketers can often turn this to their advantage, as there is always a price premium for customization.•perishability Services cannot be stored and displayed permanently. This is a major problem for service providers who cannot get full utilization (e.g. in professional services) of their services or spaces (e.g. aircraft seats, hotel rooms, theatre seats) that they are selling. Marketing of these services, therefore, needs to constantly cope with permanence of supply, but with huge variations in demand.•ownership Unlike products, services do not result in a transfer of property ownership. See also services marketing.•service delivery involves the customer directly on many occasions: ordering a meal, using electronic banking, specifying a hairstyle, loading and unpacking groceries through a check-out, showing potential buyers around a house for sale, helping diagnose a medical problem. In these cases, human interaction and demonstrable expertise is paramount. In other cases, technology can be used to enhance customer service: travel booking, investment analysis, and security services. Services delivery has become a subtle interplay of technology and human interaction.•service distribution Services are mainly delivered by people but in key locations, such as banks, aeroplanes, salons, travel agencies, restaurants, hotels, law offices, and hospitals. Services can be delivered remotely, such as broadcast entertainment, distance learning, financial and information services. Another way of distributing services is through a network of franchisees who have a common brand and who are trained in the same level of service delivery.•service encounter A moment of direct interaction between the service provider and the customer in which service delivery is put to the test. The customer's experience of this encounter can determine the brand reputation of the service provider for a considerable time after the encounter is past.•service environment The overall environment within which a service is delivered. This combines design, access and physical, emotional, and atmospheric dimensions.•service guarantees are much more difficult to design and manage than unconditional product guarantees, but are becoming more prevalent as the industry expands. Holiday companies will often provide compensation for poor hotel rooms; airlines for delays; freight companies for lost packages. Service charters to customers are commonplace. The inability to offer unconditional guarantees in most of the service business has led to a higher emphasis on customer complaint handling and follow-up.•services marketingSee marketing.•service pricing has as many forms as there are services: pricing of services is usually a combination of expertise, time taken, and speed of delivery. Price forms are also very different; for example entertainment services are usually priced through admission tickets with all kinds of variables; personal care services are priced based upon skill levels and time; estate agents take commission based on sale value; buses, taxis, trains, and planes take fares based upon length of travel; professional services charge fees based upon expertise by the hour or day; financial services charge interest based upon amount of debt or services; governments charge taxes for services, locally, and nationally; employees are paid salaries, wages, and bonuses for their labour and skill level.•service process Very problematic particularly because of the difficulties of constantly keeping supply and demand in balance and the variability of service quality.•service quality Probably the single most important factor in any service business. The company's personnel are critical to this—much more, for example, than in a product company. Customers have rising expectations of quality service delivery and can easily take their business elsewhere. Service companies have to be committed to their employees and, effectively, market to them. Marketers in service companies must be constantly working on improving service delivery programmes and quality and identifying gaps in perceived quality by customers.