Marketing theory and practice developed initially in connection with physical products such as toothpaste, cars, and steel. Yet one of the major megatrends has been the phenomenal growth of services. In the United States, for example, service jobs now account for 79% of all jobs and 74% of gross domestic product. And according to the Bureau of Labor Statistics, service occupations will be responsible for all net job growyh through the year 2005. These numbers have led to a growing interest in the special problems of marketing services.
Service is increasingly important because the information age is making service a much larger and more important part of every advanced economy. So, what is service? A service is any act or performance that one party can offer to another that is essentially intangible and does not result in the ownership of anything. Its production may or may not be tied to a physical product.
Services have four major characteristics that greatly affect the design of marketing programs: intangibility (services cannot be seen or touched, making it difficult to communicate and price unfamiliar service features and quality), inseparability (services are typically produced and consumed simultaneously), variability (services are highly variable, because they depend on who provides them and when and where they are provided), and perishability (it is not a problem, when demand is steady, but in case when demand fluctuates, service firms have problems). Each characteristic poses challenges and requires certain strategies. Marketers must find ways to give tangibility to intangibles; to increase the productivity of service providers; to increase and standardize the quality of the service provided; and to match the supply of services during peak and nonpeak periods with market demand.
Once service industries lagged behind manufacturing firms in adopting and using marketing concepts and tools, because they were...