200 CHAPTER11 DESIGNING ANDMANAGINGSERVICES
Aserviceis 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 such as banking and other financial services are a mainstay of the
Internet. E*Trade, for example, the second-largest U.S. on-line broker, allows cus-
tomers to quickly buy and sell stocks, bonds, and mutual funds at a low cost through its
Web site. E*Trade’s nearly 2 million accountholders can also use the Web site to locate
research about stocks and bonds, plan their portfolios, and get checking accounts and
loans through the firm’s Telebanc subsidiary. Even noncustomers can access the site’s
free financial news, tax and investment tips, and money-related chat rooms.^3
Many manufacturers and distributors also use a service strategy to differentiate
themselves. Acme Construction Supply in Portland, Oregon, has invested more than
$135,000 in its Night Owl delivery service: Acme personnel deposit orders into lock-
boxes at construction sites during the nighttime hours, so materials are available first
thing in the morning. Says the company’s regional team leader, “People that are very,
very price sensitive don’t do business here. But people who see the overall value we
provide do. And it’s very intimidating to our competition. They have to walk around
our delivery boxes every day to make their sales calls.”^4Categories of Service Mix
As the previous examples show, services are often part of a company’s total offering in
the marketplace. Five categories of an offering’s service mix can be distinguished:- Pure tangible good:The offering is a tangible good such as soap; no services accompany
the product. - Tangible good with accompanying services:The offering consists of a tangible good
accompanied by one or more services. General Motors, for example, offers repairs,
maintenance, warranty fulfillment, and other services along with its cars and trucks. - Hybrid:The offering consists of equal parts of goods and services. For example, peo-
ple patronize restaurants for both food and service. - Major service with accompanying minor goods and services:The offering consists of a major
service along with additional services or supporting goods. For example, airline pas-
sengers are buying transportation service, but they get food and drinks, as well. - Pure service:The offering consists primarily of a service; examples include baby-sitting
and psychotherapy.
An increasing number of companies that are known for their tangible goods
offerings are now looking to boost profits from services. Consider General Electric,
which built its business on the production of goods such as refrigerators and light
bulbs. These days, its fastest-growing unit is GE Capital, which consists of 28 businesses
ranging from credit cards to truck leasing to insurance. Germany’s Siemens is moving
in the same direction by setting up a financial services division as a profit center.^5Characteristics of Services and Their Marketing Implications
Services have four major characteristics that greatly affect the design of marketing pro-
grams: intangibility, inseparability, variability, and perishability.Intangibility
Services are intangible. Unlike physical products, they cannot be seen, tasted, felt,
heard, or smelled before they are bought. The person who is getting a face lift cannot