In economics, the characteristics of services differ from manufacturing goods in a number of ways. In the chapter of ‘The nature of services” Van (23), the authors stated that differences between services and goods lay in the intangible property. Additionally, they identify the differences between the two terms by the simultaneity, heterogeneity and perishability properties of services.
We will write a custom Coursework on Goods and Services Differences specifically for you
301 certified writers online
The reasoning behind this is that unlike goods, services have intangible properties. This implies that services rendered to customers cannot be smelled, touched, heard or tasted. Similarly, ownership of services cannot be limited to individual traders in business operations. Due to the intangible characteristics of services, they cannot be produced on stock (Weele 92).
The other unique characteristic of services is its perishability property. Services are perishable in two contexts. The first context is that services cannot be reversed. This is because once a customer consumes the services they cannot undo the actions or reverse the exact same time taken to perform the task. In the second context, services use specified systems, resources and processes to be rendered at a specified period. If a customer does not designate a specific time for the delivery of services, then the services cannot be rendered (Weele 93).
The other property that distinguishes services from goods is its inseparability property. The service provider and the customer are two parties of a business transaction that are not separable to services. This is because customers are wholly involved from requesting the consumption of services while the service provided is wholly involved from advertising of the services to its delivery (Weele 93).
The authors in the Nature of Services also identifies heterogeneity as the other unique characteristic of services. This implies that every service rendered to a customer is unique. It, therefore, cannot be standardized because it entails the exchange of knowledge and expertise that is limited to individual human beings. This explains why the consistent quality of production is difficult to produce (Weele 93). These characteristics of services refer to the fact that production and consumption of services occur at the same time. It also occurs in continuous interaction between customers, employees, suppliers, managers, etc.
“The intangible, performance-dependent nature of service offerings, together with a focus on customers, is an aspect of a services management that leads to a notion that ‘service exists only in a customer’s mind.” In a business environment, this is true because firms use marketing strategies to advertise offerings of the service provider with the aim of creating an image of quality to its customers. This is notion has become widespread over the years because of the increase in global competition, heightened awareness among consumers as well as the diversity of services (Terrill & Middlebrooks 92).
Services are put under two categories namely the core services and the peripheral services. Core services are described by the fundamental customer reason for the transaction of the services. Peripheral services are related to the ancillary aspect of the core services. For instance, in the airline industry, the core service is the trip of the passengers as well as the basic flight itself. Peripheral service, in this case, relates to the ground supporting services. These are services such as baggage handling, availability of executive conference rooms, etc (Belobaba et al 377).
In the economic environment, gathering insight regarding service operation and its management plays a relevant role in activities rendered to customers. In general, studies reveal that the importance of customer behavior focuses on modeling, managing and researching services given to clients of the business operation. It also demonstrated strong support for contingency theory. Service package and augmented service offering work hand in hand in improving the quality of service towards the customer’s eyes (Terrill & Middlebrooks 92).
Augmented services are influenced by the bundle of peripheral and core services. It is also influenced by how services are delivered to customers. Augmented services also identify with how an organization manages its promotions and its external communication with its stakeholders (customers). This implies that it is, therefore, the offering of augmented services that creates the potential of service quality to customers (Terrill & Middlebrooks 92).
Since many organizations have realized how the unique characteristics of service play a key role in the mind of customers, they have developed strategies with the objective of creating a positive perception of customers. One of these strategies is known as branding. Branding is used to represents many intangible aspects of both products and services. It creates in the mind of business’ customers the perception that there is no service provider that offers consistent quality service but the specified service provider. In general, branding gives the status, image, lifestyle, and quality of outputs rendered by an organization (Terrill & Middlebrooks 92).
Due to the intangible and performance-dependent nature of services, the existence of services is mainly inscribed in the minds of customers. Many organizations have therefore developed various marketing techniques to convince their customers that their services are worthy of purchasing. Strategies such as public relations and packaging have been utilized to meet the various needs and requirements of customers.
Additionally, the notions developed from Johns, 1999′ (pp. 965) is true because the potential of a service business to grow it lies solely in the perception of customers after services are rendered to them. If most of the needs of customers are met then the potential growth for the service is higher. This is because of the increase in consumer loyalty and the improvement of awareness among individual clients through techniques such as word of mouth.
Conversely, it is hard for the business of a service provider to grow if it’s perceived that the quality of services is poor. This is because unlike products that can be exchanged and re-delivered services are irreversible. An example of this is services rendered by an airline industry. One of the methods to measure services offered by an airline industry is through the measurement of a total number of departures by the airlines, the mileage covered by the airstrip and amenities & frills rendered by the organization (Belobaba et al 377).
The airline industry mainly specializes in air transport services for both freight and passengers. This business operation is enabled through the ownership or leasing of aircraft. The services rendered in this industry can be subdivided into four namely; intra-continental services, intercontinental services, international services, and domestic services.
Get your first paper with 15% OFF
With the case study of the airline industry, the viability of the statement stipulated from Johns 1999 can be demonstrated variably. First, services exist in the mind of customers because the customers cannot touch, see, the smell of taste the type of services that are rendered to them. The intangible characteristics of a passenger’s journey as they travel on air cannot be held owned or transferred to individual passengers. This also applies to the services offered during the journey such as baggage handling, the offering of food and refreshments, etc (Belobaba 378).
For instance, the ‘wait time’ that is specified to passengers in an airline industry plays a significant role in the business operations of firms. In this case, airline delay is considered a service failure. Similarly, discrimination of passengers is also considered as a service failure. The consequence of this is that a wrong impression is created to the customer’s mind and this bridles the growth of business for the specified airline. Once passengers perceive that the services rendered by airlines are poor, they opt to acquire the same service from another service provider (Belobaba 383).
Since services are a notion that exists in the mind of customers, most airlines have made it their priority to render quality services to their customers. They have sort to improve customer’s perception through emphasizing on quality. In the Kingfisher Airline industry, for example, the aircraft have laptops and mobile phone chargers on every seat. Moreover, every seat is equipped with personalized IFE. This provides passengers with a wide range of movies as well as live T.V. channels (Plunkett 686).
Furthermore, the services rendered by the Kingfishers Airline Industry provide its customers with a chance to earn revenue. The Airline Industry has a program that is known as the frequent flyer program. This program allows passengers to earn bonus points for using any service with the airline. The services being awarded include partnering with the airline, traveling, financing the business firms, car renting, etc. The points being awarded are known as King Miles and it’s divided into various categories (Plunkett 686).
The frequent flyer program has created a positive impression on the customers. This is because customers of the airline perceive that services rendered to and from the airline as an opportunity to generate revenue. Due to the quality of services provided by the Kingfisher Airline industry, its business operation has grown significantly over time. The airline not only specializes in transporting passengers but it also has cargo that transports goods (Plunkett 686).
Services are a form of activities that occur from the interaction between a group of individuals with another individual (s) or with machines. In business, the main objective of rendering services is to provide satisfaction to the customer as they meet their specified needs and requirements. According to Mills and Marguiles, there are three forms of service interactions. These are maintenance interactive, personal interactive and task interactive services.
In maintenance, the interactive interface is services identified in the banking environment while task interactive is mainly identified in engineering companies. As the name suggests the maintenance interactive service is aimed at attaining the requirements of stakeholders through maintenance of safety environment, products, etc. Strategies to develop high-quality activities for customers are also stipulated. Personal interactive services identify with tasks that are offered to customers on a one to one basis between the employees of an organization and its customers.
In personal interactive services, the authors identify seven different variables. The first variable is organizations should have the ability to clarify a problem. Services rendered should also involve customers in the decision-making process as well as demonstrate the attachment of subordinates to the firm. Similarly, the organization should identify the nature of input and output in its communication network. This type of interactive services should clearly state the time spent in gathering data as well as time spent in reaching a decision. Transferability to employees and perceived expert powers are two aspects that enable personal interactive service to play an influential role in the organization. Firms should, therefore, put into consideration these variables in order to take advantage of benefits enhanced by the three interactive services.
Front-line personnel is a group of subordinates that deal directly with customers. These employees act as a medium of communication between the organization and its clients. From the three tasks that are identified by the authors, some of the activities maintenance interactive include: Protecting health and safety, planning and monitoring programs within the organization. This is done through developing goals and strategies, coordinating and participating in meetings of a support network, etc.
Some of the task interactive services for the front-line supervisors include providing and modeling direct support, coordinating procedures, rules and policy compliance, maintain staff schedules and payrolls, coordinating vocational support, etc. Tasks and duties identified with personal interactive services include enhancing staff relations, promoting public relations, managing personnel, etc.
The relevancy of standardization in three types of services is that it provides a set of rules for performance. This gives the subordinates criteria against which services rendered to customers must be measured with the use of internal or external reviews. Standardization gives the three forms of interactive services an opportunity for discussion and coordination of tasks. The significance of this is that strategies that are suitable and desirable in the performance of activities chosen.
The ease of introduction and communication technologies is relatively easy once the firm uses the three forms of services identified with Mills and Marguiles. The maintenance interactive services ensure that all the technologies introduced to an organization are safe for both the customers and the employees to use. The task interactive services ensure that uses of ICT are well placed in the various department of the organization. This is to ensure that maximum benefits are efficiently generated by the introduction of communication technologies into the firm (Das Vinu 686).
Similarly, personal interactive services ensure that subordinates learn how to cope with the changes initiated with the introduction of communication technologies. Development of training programs such as seminars is utilized in the organization in order to improve the knowledge of employees as well as their specialization. This subsequently improves their productivity and the quality of services that they render to customers.
Labor intensity is defined as the ratio of labor cost to plant and equipment In the operation of the service process, customer interaction represents the scope of intervention that a customer has control over in an organization. This characteristic measures both the customer interaction with the business as well as customization. The higher this degree the higher costumers can demand or fewer services (personal interactive services). This subsequently identifies with the amount of time and effort needed to deliver a service. If the services provided by an organization require a high content of time at a relatively low cost, the service environment for the business is known as labor intense (Nankervis, 16).
Belobaba, Peter, Odoni, Amedeo & Barnhart, Cynthia. “Global The Policies, Procedures of ATC.” Airline Industry. John Wiley & Sons, Inc, 2009. Print.
Das, Vinu. “Keystroke Dynamics Authentication Using Neural Networks Approaches.” Information and Communication Technologies. Library of Congress Cataloguing-In-Data Publications, 2010. Print.
Nankervis, Alan. “Classification of Services.” Managing Services. Cambridge University Press, 2005. Print.
Plunkett, Jack. “Kingfisher Airline Industry.” Plunkett’s Transportation, Supply Chain, and Logistics Industry Almanac. Plunkett Research, Ltd, 2009. Print.
Terrill, Craig & Middlebrooks, Arthur. Market Leadership Strategies for Service Companies. Library of Congress Cataloguing-In-Data Publications, 2000. Print.
Van, Dierdonck. Services Management. 2nd Edition. Essex, England: Pearson Education Limited, 2003. Print.
Weele, Arjan. “Differences between Goods and Services.” Purchasing & Supply Chain Management. Cengage Learning, 2010. Print.