Goods and Services are the major necessaries of life of the people which fulfils its needs or wants and most marketable commercial activities in the developed as well as developing countries. As the demand for goods rises in developed countries, the companies pay more attention towards services. In the Developing Countries, 70% or higher GDP (Gross Domestic Product) arrives from services and manufacturing of goods has moved out to the developing world. For instance, in India, 50% of GDP arrives from the service sector only.
Pure services is a combination of goods and services which turned into pure services known as Continuum of goods and services. Services may changes within a day’s or time to time. There are few differences between goods and services, the major among them are as follows:
High Intangibility: Services have higher intangibility like winter or summer uniforms for children in schools, packaging of food for delivery but there is a one feature which is always common i.e. intangible.
Inability to save them for sale in future: For example, Electricity cannot be stored . It has to be supplied whenever its need arises and consumed at the same time which creates problems in understanding fluctuating between demand and supply for services.
Higher Variability among customer expectations for services and its delivery.
One of the important aspect of services is that they are intangible. Many customers does not appreciates the services rather than goods. Goods are tangible that the consumer receives their money returns that they spent on it but services are remain tangible which doesn’t have any ownership towards something. According to the American Marketing Association, services are defined as activities, advantages and performance or satisfaction of needs or wants which offered at the time of sale. There are two types of services – Pure services and the services that are attached to the goods sold. They have two aspects of services: First, It is intangible in nature . Secondly, defined as activities or acts performed that creates satisfaction. Here, some other important aspects of services that are as follows:
- Interaction of service provider with the consumers which is an integral part in creation and consumption of services.
- Production of services might be tied close to products.
Intangibility is one of the important dimensions of services and all the services don’t have unique degree of intangibility. It involves lack of physicality. In services, the performance is judged by a tangible element but the customer purchases are a performance so that it delivers the service which comprises the product. Intangibility Characteristic of Services affects the international business which involves two categories of services i.e. low intangibility and high intangibility. In case of low intangibility, the services offered in terms of tangible elements such as office equipments for staff whereas in high intangibility, the services would be legal or financial or doctor advice.
Suppose, a newly US based company have its sale offices in India which sells its home entertainment products for Indian consumers. When we comes to a products like Sony televisions, laptops etc which provides intangible services like flexibility, convenience and entertainment for the consumers but the services like warranty or financial facility leads a problems to customers which affects the business position in the following ways:
Consumers depends on promises and further services expectations towards buying a products depends on the goodwill.
More emphasis on gathering information from family friends who uses the products and kept an eye on a brand image.
They used the pricing as a pinpoint for judging quality of the products.
As the needs and wants of consumers changes so accordingly the services would changes which creates difficulties to makes changes in warranties or financial facility policies.
Is the consumers can trust on the company based products as the marketing of services may be failed to attract may be questioned.
Inseparability is also one of the most important characteristic of services. Services should be characterised by both consumption and production simultaneously. That means, it should be produced and consumed at the same time. Sometimes, production and consumption of goods may be separated by time and place but production of services can never be separated from the market. For example, In flights, consumers should be present at a right time to take off otherwise there would be a wastage of services. The customer and service provider interaction along with cooperation is necessary.
In international market, if the goods are not available in the market at the right time, place or quantity then neither the process of goods would works nor the services consumed or sold. Suppose, if the goods are manufactured from US to India , then the services should be localised and it cannot produced in a central place and shipped from the different markets situated at different destinations from the production destination. The Inseparability also affects the international business in developed as well as the developing countries. For example, A Chinese Company manufactured its products to Indian company factory then the goods must moved for production and consumption at the same time. In case of goods, either the provider moves to the customer or the customer reaches the service system which is very crucial for enjoying the experience of services. The customer and service provider interaction is must for improving the performance of the Indian company. Even there are certain provisions developed to engage business in other countries in terms of exporting, joint ventures and foreign direct investment. The problems that are faced by the international companies in their business in respect of the customers are as follows:
Difficulty to believe them to experience the service which comprises the product.
When we talk about a new product, the service buyer seek to gather the information from the friends rather than from the company.
Difficult to attract the consumers through the use of heavy cost advertisements about the creativity of new products which turns into losses of revenues.
Variability is one of the important dimensions of the services at which the output of services must be variable. Services may suffer from lack of standardisation as a result consumer expectations would be same while buying the same service product. For example, in the banking sector, the equipment and facilities provided to the clerks who works in banks are happy while at sometimes it is frustrated for him. In many countries, Standardisation creates a problem in services. This may be because of intangibility and inseparability. If humans involved in the service creation and consumption or production then their performance could not be measured in a machine. For example, a Chinese restaurants in India, a lovely dinner would be spoiled by the rude behaviour of contact staff of customers which cannot be corrected . If there is any wrong in services , their experience are more effected seriously and wouldn’t perform to correct it.
When we talk about hotels and restaurants like holiday Inn or Midlands etc., it is very difficult to determine and implement the service specifications. For example, When we stay in a Holiday Inn room, we are confident that it provides a very nice or comfort sleep without any noises at some lower degree. As the human involved more in the creation of service, the variability problems also increases. If we talk about the service personnel in hotels may be influenced by emotions, stress which harm their performance that can neverconsidered with the consistency of machines.
Perishability is also one of the characteristic of services whose services are different from good which cannot be stored. For example, A woollen marketer provides in advance to meet the demand for woollen products in winter. When he doesn’t sell his products, he can store to meet the requirements in the next winter vacations but if the demand for woollen clothes are more in UK rather than other countries like India or China then he try to meet the excess demand of the clothes as a result sometimes the service personnel creates long waits for customers and effect on quality etc. Services doesn’t stored, it has to be consumed when they are created. In the international business point of view, for example, once an airline offers seats at 10:00 am from Delhi to London then it can’t sold them after 10:00am. As the seats are empty which can not stored to meet the demand that may occurred after 10:00am.
Issue of Ownership is one among the features of services where consumers mainly buys the products to have owned and hired the service. It is very important to highlight the impact of intangibility and inseparability on the decisions of services marketing in host country of internationalizing firms:
There are wide range of arrangements of distributions channels such as Licensing, franchising or sales offices etc.
Services operations in foreign countries are conducted by other major multinationals who are not service providers. Now, the manufacturing firms are also involved in servicing to control their manufacturing operations in advance like maintenance and repairs etc.
The Importance of marketing of services depends upon the size and growth of service sector. The Service provider are very few who applies marketing principles to their activities or operations. There are five reasons for showing slowness to applying marketing principles:
- Low Management Creativity
- Low competition
- Limited changes due to urgency in their services.
- Limited awareness of marketing
- Limited invention and innovations in distribution channels.
The Nature of services also implicit the marketers in services in the forms of intangibility, inseparability, Customer involvement, perishability, Client Relationship and highly differentiated distribution Channels.
As the Information technology developing as a result major organisations decided to offers tangible product which makes them logical and adjustable to have necessary information to its product-mix. Due to which it makes innovations to their new products. For example, A trains consists of several people moves from one destination to another and have business classes for travellers to look on stock market and hotel bookings. But it creates several problems for the marketers in a way, when the consumers doesn’t smell, look taste before they want to buy, it is difficult to evaluate and appreciates the benefits that they are waiting for. That means, the consumers rely on promises and have expectations to think whether they should buy the services or not. As a result, one important aspect is having a strong brand image for a service provider.
Customer Involvement: The major implication of inseparability for marketers is that customers are more involved in production and consumption into many types of services. For examples, if an organisation needs to purchase the services of some advertising agency, then it has to appoint some clerks to work and convey them about what are the new products and target market which shows the agency thoughts and then makes final decision.
Perishability: Goods are less perishable than services. Services are also perishable. It is compulsory to keep an eye on the demand fluctuations. For example, The demand of auditor needed at the end of month or in US, every quarter and in UK, every six months. It creates a problem for marketer that when the demand fluctuates so that it can take actions in advance.
Client Relationship: In this case, Marketers servers the buyers as clients rather than customer. The success of the service organisation depends on the performance of the employers and provides the best services as they could. For example, decision for making a good investment or advice for recovering an illness.
Inseparability: Marketing issues play an important role in making decisions like how the services should produced at which place. Suppose, if the service buyer judge the quality of the hotel which depends not only the buyers are comfortable and neat or clean rooms but also the behaviour of the hotel staff towards the buyers or customers. Marketers should take care that services should produce and sold simultaneously.