summary Letter : April 2016 Elective Services Marketing Course : PGDM : SPJIMR

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WHAT  TRAVELS ? WHO TRAVELS ?

A product is a material object which travels from the people who make it to the people who use it. Many times the On the other hand, a service is an “act” for the people who benefit from it from the people who produce it and either the customers or the providers need to travel to the “site”. the act. produce business the people travel  the product travels and the logistics cost is significant. In the service business the people travel – mostly the  customers and sometimes the service providers – and the traveling is a major consideration in the services business.

“Market radius” in cement business

“Travel and parking convenience” in malls

“Night time shopping” is the new trend when there is less traffic

“Sell only where there is service location”in TV business

Teleconference reduces need to travel personally? Really ?

POSSIBLE  TO  INSPECT  BEFORE  BUYING ?  Customers like many of their products to be standardized but they want most of their services to be customized. This is also because a product can be pre-inspected whereas a service cannot be. A service needs to be experienced and , when a customer is being serviced, it is natural for him to want it customized based on his feedback. TANGIBILITY : The products are tangible and can be inspected / sampled before buying. Service on the other hand is experiential and sometimes based on a belief. 

HOW IMPORTANT ARE PEOPLE IN DELIVERING QUALITY ?: The quality expected from a product is mostly embedded in the product itself at the time of its manufacture and depends in turn on the quality of the materials used and the setting of the machines. Both materials and machines, being inanimate, can be standardized. On the other hand the qualities that people expect from  service are different : customization and variation is appreciated in service and this depends a lot on the experience, skill and motivation of the service-giver on the spot.

SCALABILITY :  The product business is scaled up by expanding the manufacturing, distribution and  reach capacity. On the other hand, the service business needs a supply of trained service providers and this involving either poaching people from the competitors or increased activity of recruitment, induction, training and motivation. Attrition of trained manpower is a danger to service business.

OWNERSHIP : A product ( flat, car, machine) can be owned and can go into your balance sheet as an asset and is re-salable and you can accumulate it to build your wealth. A service ( degree, surgery, haircut) cannot be owned as is always shown as an expense. It is not resalable and cannot be transferred to someone else. Products begin as materials and machines work on those materials to create improved / shaped / transformed materials which are called products. Services begin from service givers and improve / shape / transform  objects (woodwork), bodies (surgery), minds (education). 

THE SOURCE OF VALUE : The customers buy "products" essentially for the value they find inside the box - whether a soap or a TV . On the other hand, the customers buy "services" for the value of they find in the "encounter" with the service provider - whether doctor, waiter or a consultant. The quality of the products depend essentially on how materials are chosen and converted. The quality of the service depends on how the service providers are selected, trained and motivated.  

THE ROLE OF SENIOR MANAGEMENT :   In product business the managers are the heroes. In service business the front line employees are the real heroes. The process of creating a market-driven design in a product business involves many months of work by expert manpower and managers before the product is produced. These experts are involved in doing the marketing work -  doing situation analysis, formulated MVC, deciding specs of material, machines, men and methods. A lot of expert work happens at the back end over a long period of time before even a single product item is put into market. On the other hand, the same process of creating a market driven design needs to happen in front of the customer in few minutes in services. The front line - far away from the HO - and without the luxury of experts and time – is tasked with understanding the customer and producing service to satisfy the customer.

 THE POSITION OF THE CUSTOMER : In the product business, the customer is outside the manufacturing process and hence two processes need to be created (1) The process of bringing the voice of the customer in the process of product creation (2) The process of physically taking the products to market where the customers are. In the service business the customer is inside the business and cannot be ignored – his requests and demands force your front line service providers  to understand and adapt to him. That is why, in service business, it is worthwhile to treat the front line service givers as the customers themselves.

THE ROLE OF STANDARDIZATION AND MECHANIZATION : In the product business, a company proactively anticipates what the customer wants, frequently standardizes its products, makes them to stock off-line (when the customer is absent) and brings them through the supply chain to where the customers are. Mechanization is used extensively in the processes. The machinery is used to process materials and machines. In product business the role of the machines is primary and the role of the workers operating those machines is secondary. On the other hand in the service business, a company is managed in a reactive mode by asking customers on-line what they desire and then the company tries to deliver it in an individualized manner in real time at the front line. Since the value is created mainly through conversation, individualization and customization , the role of employees is primary and the role of the machines i