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Identify and discuss the distinguishing characteristics of services. What problems do these characteristics present to marketers?

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PART A Question 1. Identify and discuss the distinguishing characteristics of services. What problems do these characteristics present to marketers? (40% of marks) The service industry has becoming the dominating fraction in the GDP for many of the leading nations in the past few years. 80% of the USA's and 74% of the UK's GDP is in services and not manufacturing, which it has been for many years before1. This change can be seen as a result as a large increase in the disposable income of the consumers, who are often encouraged to spend rather than save. Consumers also have more time off work and are inclined to spend their time in leisure activities that have become so readily available in so many places around the globe, such as restaurant meals and weekend hotel breaks. Greater discretionary income has increased the need and demand for financial services. Deregulation has been the catalyst in boosting competition in certain service industries such as television and telecommunications.2 Westernization has played an important role in the spread of the services industry around the world. ...read more.


However, there is a very unclear production line for services and the production is almost indivisible to the consumption. Services are bought and consumed at the same time, and the customer is very much like a partner in the production process. As a result of this, the conditions of the arrangement must be carefully revised. Due to the close proximity and integration of the customer in the service industry, customer care has become increasingly important. This is often what will separate the quality of the service providers. Through the provision of suitable customer care and convenience, the consumer will feel like their money is going further and will be more willing to agree to the firm's terms. This can actually be said for companies in general. Sainsbury's has spent millions of pounds training staff to be more customer care aware, and sees this has the method to been recognized as the number one food retailer over its rivals Tesco. In the service industry it is very easy to look at the service (alone) ...read more.


However, airline seats, for example, that are not filled will always be a loss in profit. Thus it is important for service companies to match the supply and demand. Due to the varying demand for services (such as hotel rooms during peak and off-peak seasons), firms must use marketing to convey the incentives that will encourage customers to use their service during periods of low demand. Just as important is to be able to cater for a high demand. A physical goods provider can bring out reserved stock during peak sales, but this is more difficult for a service provider. Ways of countering this problem include, hiring part-time and temporary staff, multi-tasking the workforce to do a variety of jobs, involve participation of the customer (like self-service buffets in hotels). Demand may become more smoothed out with differential pricing, making off-peak rates cheaper as well as creating a more stimulating experience during this period. 1 CIA 2000 2 Business Marketing, A. Gross, P. Banting, L. Meridith, I. Ford, 1993 3 Business Horizons, Services marketing is different, L. Berry, 1980 4 Principles and Practice of Marketing, 2nd edition, David Jobber ...read more.

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