In the services marketing literature, many differences between services and con-sumer goods are discussed. These differences are then interpreted as the
‘characteristics of services’. Figure 1.3 shows a selection of typical differences or service characteristicsrespectively. We will see that all these characteristics can be ascribed to one central characteristic: services are processes. The service itself is predominantly a process: the flight on an aeroplane, consulting with an invest-ment adviser, haircutting, attending a university, repairing a car. Of course, the customer also benefits from the service outcome, e.g. the arrival at the flight desti-nation, the chosen portfolio strategy, the university degree or the repaired car.
However, each of these services itself is a process.
The notion of the process outcome leads to one of the other service characteris-tics mentioned most often: services are intangible. Especially compared to the outcome of the production process in the consumer goods industry, i.e. the pro-duced good, this difference becomes obvious. A car, a suit, a diamond or a
Services are processes Services are co-produced
by the customer
Services can’t be transported
Services are intangible
Services are perishable Services are
heterogeneous
Services are produced and
consumed simultaneously
FIGURE 1.3 Services are processes
detergent are very tangible outcomes – although their benefit might often be intangible. However, the outcomes of service processes are in most cases intangi-ble. Furthermore, in the service process itself, tangible rather than intangible elements are relevant, like competencies, know-how, etc. The intangibility of services results in the importance of employees and communications in the qual-ity evaluation process of a customer.
Because of their intangibility, service capacities can decay, i.e. services are perish-able and cannot be stored. The seats in an aeroplane, the cinema, the football stadium, the rooms in a hotel, etc. cannot be utilised at another point in time if they are not utilised at their scheduled time. Another consequence of the intangi-bility of services is that services cannot be transported. These characteristics of services especially influence the capacity management and the delivery systems.
Furthermore, services are consumed and produced simultaneously. In contrast to consumer goods, e.g. a can of beer, a customer cannot purchase a service, then go home and utilise it later. Quite the contrary, when a flight is over (i.e. after the production process of this flight) the service is already consumed.
In addition, services are heterogeneous, i.e. a service can be very different for each customer. A tennis coaching course for a customer who is very talented, engaged and willing to learn, will be very different from that for a customer who is the opposite.
These two factors – that services are heterogeneous and are consumed and pro-duced simultaneously – are the result of another characteristic that will be covered in greater depth because of the central role it plays in services marketing and the concept of this book. A major characteristic of the service process is the participation of the customer, i.e. the service process cannot be conducted without some customer involvement. Therefore, the customer in services marketing theory is also called the co-producer or prosumer of the service. In other words, the customer of a service is regarded as an ‘external factor’. In production theory, the production of goods is explained by the specific combination of production fac-tors, i.e. how the work of employees, materials, etc. are combined in order to produce the end product that is then sold to the customer. In order to ‘produce’ a service the customer has to be part of the ‘production process’ (e.g. a visit to the hair-dresser). Therefore, the customer is called an external factor. The meeting of the internal (e.g. doctor) and external factors (e.g. patient) during the service ‘pro-duction’ results in the service outcome. Even though service outcomes are mostly intangible in nature, there are also material outcomes of service processes, e.g. the report of a market research project. In most services, the customer benefits from the service outcome, i.e. the repaired car, the new haircut or the revenues realised based on the growth strategy recommended by management consultants. There are also services where the customer benefits from the process itself, e.g. a theatre visit or sports event.
How can the external factor be characterised? The general view that the cus-tomer is integrated into the service process can be more differentiated when we acknowledge that there are also services where an ‘object at the customer’s dis-posal’ is integrated into the process (e.g. car repair). Thus, the external factor can
be the customer himself or objects (animals or in some cases people) which are at the customer’s disposal or for which they are responsible.
What does this customer integration mean to provider and customer? From the provider’s perspective, the customer and their objects are production factors that are necessary for the service delivery. In contrast to the internal factors, these external factors are not at the disposal of the service firm. For example, a car cannot be repaired when it is not at the garage. Or a hotel room cannot be used when the customer does not appear at the hotel. Therefore, this external factor is a source of uncertainty for the service provider. Furthermore, customers differ according to their characteristics that might be relevant for the quality of the service produced, thus the external factor is heterogeneous resulting in heterogeneous service processes and outcomes. For example, the outcome of a consulting service might differ considerably depending on the customer’s openness and willingness to provide information that is needed in the process.
From the customer’s perspective, the integration of the external factor means the abandonment of the external factor during the production of the service. In the case of the personal integration into the process, the customer spends time that could be used for other activities. In the case of a visit to a cinema, the customer for example cannot simultaneously eat in a restaurant or work. When an object is integrated into the process, the customer dispenses with this object – they cannot drive their car during a car repair nor can they spend their money when it is invested in some banking product. Furthermore, during the production process, the external factor might be affected by internal factors. Thus, the customer, too, experiences an uncertainty regarding possible damages of the external factor: at the hairdresser, the customer risks a bad haircut; when investing money, the cus-tomer risks the loss of the money, and at the dry cleaner, the cuscus-tomer risks damage to their clothes.
As we have outlined, all the service characteristics discussed above are con-nected with the notion that services are processes (see Figure 1.3):
• Services are intangible because of the intangible nature of the service process, its input (e.g. employees’ abilities) and its outcome.
• Services are perishable because processes can only be conducted and not stored.
• As a consequence services are not transportable.
• Services are produced and consumed simultaneously within the service process.
• Services are heterogeneous because for different customers, service processes might differ.
• Services are co-produced by the customer because without the presence of the customer in the service process, a service cannot be produced and delivered.
The process characteristics of services lead us directly to the company processes aimed at creating value which will be discussed in the following section.