SM/U3 Topic 2 Service Product
The term ‘service product’ encompasses a myriad of different types of services. The definition proposed is still one of the most effective in capturing the key distinguishing characteristics of different types of service products: ‘A service is an intangible product involving a deed, a performance, or an effort that cannot be physically possessed.’
There is little doubt that both intangibility and non-ownership are key characteristics of service products, although other characteristics are important. Staying with Berry’s definition, if we can see that the product is essentially intangible then the customer does not take physical possession. There are, however, tangible elements to the product of a flight: the aeroplane itself, the seat we occupy, the meals and drinks we are served are tangible aspects of the air travel product. In addition, we do take ‘physical possession’ of certain elements of the product, e.g. the seat, the meals and drinks.
However, the core benefit that the customer is purchasing is essentially intangible. This example shows that most products have a mixture of both tangible and intangible components. If we think of tangibility as a continuum, service products are those where the intangible element is predominant. This idea of a continuum of intangibility is frequently encountered in texts on services marketing and is a useful way of evaluating whether the customer is buying what is essentially a tangible product or a service. An example for business products/services adapted from Shostack2. A list of examples of where the intangible element is dominant, and hence examples of what we define as service products, includes:
- Fast food;
- Insurance and banking;
- Health care;
- Public transport;
- Legal/financial advice;
- Personal health and beauty.
There are numerous different service products. An important fact to note is that although they are usually relatively easy for the marketer to classify as being service or non-service products, ultimately it is the customer who decides whether or not a product or service is being purchased, and hence marketed, according to the relative importance attached to the tangible versus intangible elements.
A continuum of tangibility and intangibility: business/product service classifications
Intangibility is certainly one of the key characteristics that distinguishes service products from tangible products. What about the notion of ‘non-possession’ referred to in Berry’s definition, and what are the other distinguishing or special characteristics of service products? These other suggested special characteristics of service products, including the aspect of non-possession, or non-ownership, are now outlined. As with the characteristic of tangibility these so-called ‘special characteristics’ are a matter of degree and best thought of as a continuum. For each of these characteristics we have outlined the marketing implications and issues to which these characteristics give rise.
As explained in the air travel example a characteristic of many services is that they are used rather than owned. Another example is a holiday where we simply use the services of the holiday provider as opposed to taking physical possession of a product.
Non-ownership can sometimes make it difficult for a customer to assess and appreciate the advantages of purchasing the service. The marketer therefore needs to pay particular attention in emphasizing benefits of non-ownership, such as no long-term commitment and inexpensive maintenance in promotional programmes.
At one time few private car buyers in the UK would have considered leasing a car on a long-term basis as opposed to purchasing one either outright or on credit. However, partly as a way to help customers finance the use of a car, over the last ten years the majority of the major car manufacturers have introduced what effectively are leasing schemes albeit often under other names. An increasing number of customers not only find this a more convenient way of covering the costs of having access to a new car, but also find there are many benefits to not actually taking ownership of a vehicle.