What is a Service?
Kotler and bloom (1984) defined service as:
“Any activity on benefit that one party can offer to another that is essentially intangible and does not result in the ownership of anything”
Therefore, a service can be:
- An act or performance offered by one party to another
- An economic activity that does not result in the ownership of anything
- A process that creates benefits by facilitating a desired change in – intangible assets, physical possessions or the customer themselves.
From a consumer`s point of view, services can be viewed as activities (activities which a customer cannot perform himself or he chooses not to) offered for sale which provide valuable benefits and satisfaction to a customer.
GATS identified 155 activities as service and classified them into 11 categories. They are:
- Business service
- Communication
- Construction and engineering
- Distribution
- Education
- Environment
- Finance
- Tourism
- Health
- Recreation
- Transportation
CHARACTERISTICS OF SERVICES
- Services are activities rather than things
- Services are intangible- i.e. we can’t see, touch or feel a service.
- Thay are inseparable i.e. they are produced , distributed and consumed simultaneously
- They are heterogeneous i.e. all services vary in time taken for delivery and consumption and the quality and extent of service
- They are perishable i.e. it cannot be stored
- Customers do not obtain ownership of a service they avail once
- They are variable i.e. It refers to variations in service quality due to presence of human element
- In case of services there is greater involvement of customer in production process
- Services are difficult to visualize and understand, therefore they are also difficult to evaluate
- A service is essentially a process and not a product
DIFFERENCE BETWEEN GOODS AND SERVICES
| GOODS | SERVICES |
| Tangible | Intangible |
| Homogenious | Heterogeneous |
| Production and distribution are separate from consumption | Production and distribution and consumption are simultaneously processed |
| A thing | An activity or process |
| Nonperishable | Perishable |
| Transfer of ownership | No transfer of ownership |
| Core value produced in factory | Core value produced in buyer -seller interaction |
| Customers do not participate in production process | They participate in the production process
|
REASONS FOR GROWTH OF SERVICES IN INDIA
The Service industry accounts for 51% of India`s total gross domestic product .The reasons for such growth are as follows-
Changes in government policies –
- Liberal rules and regulation
- Privatization
- Rules and regulations to protect customers and employees
- Agreements on trade in service
- 100% FDI and Export promotion Measures
Socio-cultural changes-
- Rising customer expectations
- Changing role of women in the society
- Cultural changes
Business trends –
- Push to increase shareholder value
- Emphasis on productivity and cost
- Manufacturers add value through services
- Growth of franchising, outsourcing and strategic alliances
Advances in IT –
- Growth of internet
- Greater Bandwidth
- Compact mobile equipment
- Wireless networking
- Faster, powerful software
- Digitalization of text, audio, graphics, video
Globalization –
- More companies operating on translational basis
- Increased international travel
- International mergers and alliance
- Off shoring of customer services
- Foreign competitors invading domestic market