Introduction to Marketing of Services

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:

  1. An act or performance offered by one party to another

  2. An economic activity that does not result in the ownership of anything

  3. 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:

  1. Business service

  2. Communication

  3. Construction and engineering

  4. Distribution

  5. Education

  6. Environment

  7. Finance

  8. Tourism

  9. Health

  10. Recreation

  11. Transportation


  1. Services are activities rather than things

  2. Services are intangible- i.e. we can’t see, touch or feel a service.

  3. Thay are inseparable i.e. they are produced , distributed and consumed simultaneously

  4. They are heterogeneous i.e. all services vary in time taken for delivery and consumption and the quality and extent of service

  5. They are perishable i.e. it cannot be stored

  6. Customers do not obtain ownership of a service they avail once

  7. They are variable i.e. It refers to variations in service quality due to presence of human element

  8. In case of services there is greater involvement of customer in production process

  9. Services are difficult to visualize and understand, therefore they are also difficult to evaluate

  10. A service is essentially a process and not a product


GOODSSERVICESTangibleIntangibleHomogeniousHeterogeneousProduction and distribution are separate from consumptionProduction and distribution and consumption are simultaneously processedA thingAn activity or processNonperishablePerishableTransfer of ownershipNo transfer of ownershipCore value produced in factoryCore value produced in buyer -seller interactionCustomers do not participate in production processThey participate in the production process


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 –

  1. Liberal rules and regulation

  2. Privatization

  3. Rules and regulations to protect customers and employees

  4. Agreements on trade in service

  5. 100% FDI and Export promotion Measures

Socio-cultural changes-

  1. Rising customer expectations

  2. Changing role of women in the society

  3. Cultural changes

Business trends –

  1. Push to increase shareholder value

  2. Emphasis on productivity and cost

  3. Manufacturers add value through services

  4. Growth of franchising, outsourcing and strategic alliances

Advances in IT –

  1. Growth of internet

  2. Greater Bandwidth

  3. Compact mobile equipment

  4. Wireless networking

  5. Faster, powerful software

  6. Digitalization of text, audio, graphics, video

Globalization –

  1. More companies operating on translational basis

  2. Increased international travel

  3. International mergers and alliance

  4. Off shoring of customer services

  5. Foreign competitors invading domestic market

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