Why services are different

Service marketing is a different subject in university and/or the different chapter in a marketing textbook because there are distinct challenges in marketing services as opposed to marketing physical products (goods).

When marketing courses and textbooks were first developed, they primarily focused on the marketing efforts of manufacturers selling a physical product through a distribution channel and ultimately through to the consumer by a retailer.

However, since the 1980s or so, it has been recognized that services marketing needs to be studied in addition to traditional marketing education program.

The main reason is because of the unique characteristics of services, which include:

  • Perishability
  • Intangibility
  • Difficult to evaluate
  • Consumer co-production
  • Involvement of staff and other customers
  • Service Variability
  • Waiting times

An overview of each of these unique service characteristics

Perishability

When we first hear the word perishability, we usually think about perishable food. We should all know the concept fruit and vegetables in particular being discounted in a shop because they are only good for another day or two. In this case, the retailer is happy to sell even at a discount – because if they don’t make the sale they will have to throw the product out.

The same concept applies in services marketing – services are perishable, which means is that there is a limited window of time to sell the service. For example, think about a local accountant with an office in the main street. If that accountant has no business (that is, customers) on a particular day, then he/she will earn no income for that day.

Contrast that against a local manufacturer who produces too much stock on the same day. That manufacturer, however, can simply put the surplus products into storage and sell the product in the future. So because services are not physical and they cannot be placed in inventory, they need to be sold when the service is provided.

Intangibility

Intangibility refers to the service not being a physical product. This means it is not able to be touched, carried away, examined or even owned. This means it is sometimes difficult to really assess and understand what is being provided.

The challenge for services marketers is to clearly communicate the consumers the benefits of their service relative to their competitors. For a physical product, consumers can compare two goods side-by-side. But think about how easy it is to compare two legal providers if you have never dealt with either of them – hence the problem for service marketers in regards to intangibility.

Difficult to evaluate

Flowing from intangibility above, services are more difficult to evaluate and assess for consumers. Evaluation typically occurs in the pre-purchase decision stage where consumers are still trying to compare potential providers.

An extra challenge for services marketers is that evaluation is also difficult, for some services, even after the service has been consumed. An example here would be getting medical advice.


Take a patient who has had some pains in their stomachs for a few weeks and they go to the doctor who says, “Don’t worry about it, it’s nothing”. In this case, the patient may still be concerned whether or not they got good advice – that is, they really can’t evaluate the service that they received.

Consumer co-production

In the provision of certain services consumers need to be actively involved in producing that service. A good example here is education. When students go to university or college, obviously they are expecting good quality lecturers and guidance, however, a significant part of the outcome of the service is dependent on them.

Service Variability

Unlike a physical good that can be produced on a manufacturing system in an identical manner time and time again, a service will suffer from variability. Think about going to the restaurant – sometimes the experience will be fantastic, and at other times it will be disappointing.

This will occur if the restaurant is busier, or there is a different chef, or the staff are a different mood, for there are nice/annoying other customers, or certain menu items are not available, and so on.
This variability needs to be managed and customers need to educated to expect that it will occur and firms need to resolve any issues of very poor service when they occur.

Waiting times

With services that involve customers accessing the service directly, there will be waiting time and queuing situations. Theme parks and entertainment venues are faced with a significant challenge in this regard. However, queuing systems and reservation processes still need to be in place for call centers, restaurants, retailers, banks, hospitals and so on.

And of course, some customers are more important than others in some situations (such is in banking), so that the challenge is how you manage this effectively.