Year: 2020

First: Always look to personal assets or personal means

Now, I know that you don’t want to hear this but if you don’t have any other choice and you truly believe in your business then why not use your own assets or cash to get that business off the ground and making money?

You want a bank or lender to take a risk on you but you won’t take a risk on yourself  just does not seem fair.

Plus, I can guarantee you this: If you have your own assets at risk you will work harder and longer to make sure your business does succeed (which is the end goal anyways).

Second: Other bootstrapping means

There are many ways to bootstrap your business besides using your own personal funds or assets. You might look into:

Crowdfunding: while this might not provide a huge amount of money, it might provide enough to get started. Once started, other financing avenues will begin to open up.

Friends and family loans: your friends and family know you best and if you can’t sell your business concept and benefits to them then you will never be able to sell it to paying consumers. Even if your friends and family can’t or won’t invest in you, they may know of others who will you just have to ask.

Microcredit lenders: Backed by the SBA, these lenders provide more than just small amounts of capital usually up to $35,000 with the average loan being around $13,500 they also provide advice and guidance to help you better manage and grow your operation.

Third: Look to partners or investors

If your business concept is not in a huge market, has high and quick growth potential or has a lot of proprietary assets, then you will have to look locally. Get out and network in your community for other business owners or local investors.

You would be surprised at how many local or retired business owners just want to give back to their community and can provide more than just capital but can open up many other doors to you and your business. You just have to get out there and talk to everyone who will listen. And, don’t be afraid to ask. If you don’t ask, you will never get what you want!

While you might hear of others business owners landing some type of bank debt or professional investment to get their business started; also know that there had to be some outstanding circumstance or reason for it – like their uncle being the president of a national bank or as a favor to a well known family member or just simply that they have other sources of outside income that qualifies them for the loan.

The bottom line is that banks and other lenders just do not lend to start-up businesses.

In your early days, you really do have to go it alone. But, make it a challenge. Make it one of your goals to eventually qualify for that coveted business loan. This not only will help you financially manage your new business better (keeping items like cash flow, collateral, credit and debt ratios in mind) but, when you do get approved for your business loan, it will really let you know that your business has made it to that next level and on the right path to further success.

A true entrepreneur does not look at a failure to secure outside financing as a fatal obstacle to starting their new business but, in focusing on the long-term potential gains that business could provide, would easily utilizes these three steps and other self-funding means to get up and running as soon as possible.

As your business grows, more financing opportunities will open to both it and you, you just have to get started.

Hundreds of startups are launched every year. But only a few of them are able to make it to the second year. One of the top reasons behind startup failure is cash crunch or unwise financial management by new entrepreneurs. Money, like time, is a finite thing and must be allocated extremely judiciously. Startups are already lean on capital and hence entrepreneurs should be very cautious with regards to financial management. Are you a first-time entrepreneur entangled with the complexities of finance? Well, the post below offers the top tips for a sound financial management for your new venture.

Underline the different types of business costs

Your business plan must have a dedicated section for finance and accounting. The said section will clearly outline the different expense areas associated with running a business. The major expense areas for any business are legal costs, marketing costs, staffing costs, business insurance and ongoing production expenses. If you are planning for a brick & mortar establishment, you should also count in establishment & infrastructure costs. When you have a clear picture of all the expense areas of your business, you have a better idea on where to and how to exactly allocate your capital or funding.

Create an organized budget & adhere to it

This is undoubtedly one of the key money-management tips for first-time entrepreneurs.

After you have underlined the different expense areas for your business, the next step is to set budget for each. When you will set the budget, create 3 columns for each individual expense area- Primary, Urgent and Extra/Avoidable. This categorization will enable you to allocate your funds more strategically to ensure the key areas receive the most attention. It will also prevent you from draining your treasury unnecessarily for extra or avoidable expenses. The main idea of a budget is to create organization in your management.

Having a budget is not enough. You should also make sure to stick to it. Check your budget at the end of every month and find out discrepancies between the estimated amount and actual expenses. It will help you to understand whether you are going the right track or need to modify your expenses.

Educate yourself

Finance is a serious department in any business and you must keep yourself well-informed about every aspect of it. One of the best steps to smart financial management in business starts with the knowledge of major financial terms. You should gather sound idea on the crucial terms like budgeting, interest, soft inquiry, State tax, subsidized & unsubsidized loans and so on.

Go through articles and columns on finance allocation, expense areas and financial management in your business. Find out finance-related articles that are specifically written for your industry and market. You should also check out webinars and podcasts to enhance your knowledge further.

Learn how to save

Finance management is not only about sticking to your budget. You should also learn to save. It will help you to beat sudden emergencies and also leverage your opportunity to boost your resources further. Here are some great money saving tips for businesses:

• Go for a shared working space (if your business permits) to save on rent
• Try virtual networking & communications with both clients & employees to save space & costs
• Hire talented dynamic interns instead of an entire pool of highly experienced professionals
• Outsource some of the jobs to save on overhead and staffing costs
• Try open-source & cloud software programs to save on business software costs

Keep check on accounting department

One of the major reasons behind cash crunch in a business is unregulated invoices and late payments from clients. You must ensure a well-regulated and dynamic accounting department to prevent such issues. A smart accounting team lays the foundation of sound financial management for a business.

Improve your credit score

Make sure to check your credit score every month. Being a startup owner, you are certainly aspiring for sound funding from investors. Well, investors generally prefer businesses with high credit scores. Better scores affirm responsible and credible operations. So, if your credit score needs a boost, talk to a financial advisor on improving your score for wider funding opportunities.

Responsible and smart financial management is crucial when you are planning to make it big with your business.

To achieve the maximum level of profitability and success, an HR professional will align each employee’s work with the strategic goals of the firm and also ensure that the staff is well aware of the required actions and behaviors by setting clear-cut performance expectations in job descriptions. Take a look at some of the key HR objectives that apply to SMEs and startups:

1) Develop a Competency Model

The main objective of an HR department is to hire the right people for the right jobs keeping in mind their skills, expertise, and education. This objective is achieved by setting clear job descriptions, establishing job competency models for each department in the company and benchmarking roles against similar jobs in the industry.

In order to ensure smooth running of the business, HR professionals will take into account studies and data related to staffing, transactions, and costs and then create a competency model accordingly.

2) Define Organizational Dimensions

HR strategies are developed according to the aspects of the organization. It is also interesting to note that the prevailing culture of the company not only has a critical impact on the HR strategies devised but also represents the management style and values of the organization. Defining the organizational dimensions will give you an idea on how the organization is going to be more or less – will it be an organization that expects employees to ‘do more with less’ or will it be overstaffed in order to give way to innovation and experimentation?

Some other key factors that directly impact the HR strategies devised are the nature of business done by the organization, the chain of command and the structure of the organization itself. In order to effectively hire and retain staff to achieve strategic goals of the organization, human resources systems, policies, and practices are also taken into account.

3) Define Role of Mission, Vision, and Values

The mission, vision and values of the small business or startup play a crucial role in shaping the HR strategies and objectives for the future ahead. The mission of the organization will help you understand why the business exists and who it serves while the vision statement basically provides insights on what the organization hopes to achieve and where it sees itself in the future.

The values of the organization are beliefs that serve as a driving force behind the operations and actions of the organization. All three – the mission, vision and values of the organization directly impact the type and number of employees needed to meet the organizational goals.

4) Perform Workforce Analysis

A workforce analysis is considered a key part of the human resource strategy and focuses mainly on the organization, its culture, people, and the systems that have been implemented. Doing a workforce analysis is helpful in analyzing the current situation of the company in terms of the elements discussed above and where they ideally want to be in the years to come.

Identifying the gaps in these areas will enable the HR professionals to come up with specific objectives designed especially to bridge these gaps.

5) Evaluate Implemented Strategy

All HR strategies are guided by evaluation based on specific, measurable factors. A small business or startup will consider a wide variety of factors for developing, implementing and evaluating the effectiveness and performance of its HR strategy. Usually, doing an evaluation will give you accurate facts and figures on employee turnover, number of vacant positions, customer complaints, and employee grievances along with the satisfaction and dissatisfaction levels of both customers and employees.

HR Role in Management

Hiring employees: A human resource manager has to recruit employees for various departments. But not all candidates are competent for a vacant post. This is why the manager needs to create his/her own hiring process. If you are a hiring manager, you can easily automate and make your own hiring process with a recruitment software and you will be able to effortlessly source eligible candidates through posting jobs, screening the applicants, setting the interviewers and so on.

On-boarding of the hired: Not only does the HR manager recruit new employees but inducts them with the organizational culture and the ground rules. The preparation of a great onboarding and induction process may need a great amount of time but once it is applied, you will notice that the newly recruited staffs are getting on the same page with the older ones swiftly.

Communicating with the employees: The company directors can abruptly change a policy (for example, the ground rules, office time and other stuff). The human resource manager disseminates this information properly among the company workers through announcements and SMS notifications.

Optimizing compensation costs: The compensation experts in the HR department conducts extensive wage and salary surveys to develop a pragmatic compensation scheme. They ensure the company status remain intact compared to the industry standard or the employees working in similar companies when it comes to compensation costs or employee benefits.

Managing attendance: Attendance management is a key function for every human resource department. To this end, the HR manager has to deal with the recording of check ins and check outs, calculation of total worked hours, overtime and many more. Fortunately, an attendance management software can be deployed to minimize this pain point with ease.

Settling disputes among employees: There is barely an organization where no conflicts take place. In fact, conflicts can take place between the management and employees or even among the employees. However, the HR manager works as the middleman between the management and employees to solve any issue that arises within the company and thus maintains a sound relationship.

Providing work safety: There are three Department of Labor agencies in each country who are responsible for the safety and health-related issues of the workers. The HR personnel ensures the compliance of the government laws and regulations so as to provide a hygienic and congenial work ergonomics. This way, the human resource manager reduces the number of injuries, casualties, and fatalities of workers while they are maneuvering dangerous apparatuses, hazardous equipment and lethal chemicals in the workplace.

Managing company assets: It is a quite common scenario for some business enterprise that distributes laptops, cars, bikes, and other stuff to its employees for varied purposes. However, it is very important for the HR not only to allot these assets but also to take back those assets and record that information in the company database. This can easily be done by an asset management software.

Juggling with diversified methods: Every organization is unique. So, there is no “one size fits all” solution out there for every organization of the world. Thus, the HR has to juggle with multiple methods of managing his/her employees and finally has to determine which one works best for his/her organization. For example, some employees can be motivated by the ‘X’ theory while the others can easily be encouraged by the ‘Y’ theory.

Looking after the company database: It is none but the human resource manager who takes care of all sorts of important company data and information. He always has to maintain an updated database which includes job responsibilities, personal data, performance evaluation or assessment of the employees. However, employing a document management software can reduce the strain of maintaining an enormous amount of company papers. This type of software can help the HR manager share and get the desired papers instantly using the advanced search options when it is required.

Maintaining public relationships and company image: The human resource department actively organizes business meetings, seminars, symposium, giveaway ceremonies, and others in order to build a sound relationship with the target audience, government, and fellow companies within the industry. This act of engagement with the company stakeholders really upholds the company image.

Managing payroll and incentives: Frequent changes in federal and state taxes and employment law make it literally complicated and time-consuming for the HR to adjust those changes over and over again. If this payroll process can be automated by a payroll management software then this complication can effortlessly be solved with the minimalistic efforts.

A marketing plan for a new venture is not the same as a plan for an existing business as it begins with distinguishing
business planning through the vision, strategy, tactics and standards, as well as from a business plan including several sub-plans such as a financial plan, a marketing plan, and other plans when relevant: human resources, logistics, legal, and others.

Consequently, marketing planning of a new venture, often called strategic planning, is only a part of any new venture marketing plan.

When starting a small business and in any business start-up, entrepreneurs have to rely more on subjective assumptions and qualitative marketing research by interviewing potential customers, relevant business partners and other stakeholders.

The following information can be collected to some extent and analyzed effectively by using “realistic” assumptions all in order to lower the level of uncertainty when launching a new venture and perhaps increasing the self-confidence of the entrepreneur:

• Current macro environment: influential business trends as well as innovative trends.
• introduction of the prime market in questions and possibly a secondary market.
• Basic competitive trends: NOT your upcoming competition!
• basic consumer behaviour trends: NOT your upcoming segmentation!
  opportunities and threats that do not depend on your venture – only a partial SWOT.

Managing operations in the incubation phase and entering the growth phase is much easier for a company with multiple products in different phases of the curve than for one that has only one product that it’s trying to commercialize. Not only does the multiple-product company already have a reputation, but also, the products in the growth phase can help fund and fuel those products trying to survive incubation.

The products in saturation can also provide a base upon which to introduce new products. A new company trying to get its first product into the market doesn’t have these advantages. There are special challenges facing a new company trying to get footing in the marketplace.

Operation on a shoestring

Though all businesses face financial constraints, the situation is often more critical in a new business attempting to introduce a new product into the market. Unlike established companies, a start-up doesn’t have a recurring source of revenue upon which to support its development efforts. New companies typically operate on money raised directly from investors or on their own personal cash.

Above all it’s important for a new company to stay flexible. Because of the inability to afford a large staff, the company’s founders often have to take on multiple roles. They must handle not only the financials but also the design, production, and marketing of their product. This requires workers to be flexible and have a wide breadth of knowledge.

Transition to growth

If you’re a start-up, perhaps one of the greatest challenges you face is the transition to the growth phase of your product. This transition requires you to meet several needs:

• Documented processes: As the complexity of your organization increases, so does the need for defined and documented processes. These processes are necessary to promote smooth operations and planning.
• Organizational structure: While in the incubation phase, you probably didn’t have any policies or procedures in place. You may not have needed them because your staff was small, and everyone was up to speed on what was going on. However, with growth comes the need to add staff, giving rise to the organization chart, complete with a need for a reporting structure.
• Systematic planning: In the beginning of your new venture, you may have done things by the seat of your pants. Your staff may have acted on any opportunity that came along as quickly as possible. But as your enterprise matures and grows, planning becomes essential because coordinating the organization becomes more difficult.

• Task specialization: As you grow, the need for specialized individuals increases. Dedicated resources to such tasks as operations, marketing, and sales become increasingly important, and your firm may establish separate departments. This task specialization makes seeing the big picture more difficult and requires more coordination across the organization.

These changes can be difficult for those involved with a start-up. Larger companies often have different groups that take over product management as a product transitions from one phase to another. This is often necessary because the skills required in each phase tend to be different.

Every day we interact with various economic activities like – getting courier delivered at the requested address, making phone call to friend, relative, or client, having coffee at coffee shop, or taking metro to commute office. Such activities are called services because they involves deed or act and offered by one party to another for sale. 

Services differ from goods in many ways. The way a product is produced, distributed, marketed, and consumed is not the way a service is. Hence, a different marketing approach is necessary for the marketing of services.

Today, in this post we are going to explain – What services are? What are the characteristics of services? How services are marketed?

According to American Marketing Association services are defined as “activities, benefits or satisfactions which are offered for sale or provided in connection with the sale of goods.”

According to Philip Kotler and Bloom services is defined as “any activity or benefit 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.”

Characteristics of Services

1. Intangibility: Services are cannot be touched or hold, they are intangible in nature. For example– you can touch your Smartphone. But, you cannot hold or touch the services of your telecom service provider.
2. Inseparability: In case of services the production, distribution, and consumption takes place simultaneously. These three functions cannot be separated.
3. Variability: It is impossible to provide similar service every time. You’ll experience some change every time you buy a particular service from a particular service provider. For example Yesterday you had a coffee at CCD. Today, you are again at CCD to have a coffee, but you have got different place to sit today; the person served you coffee is different today; other people having coffee are also different today. Hence, your experience of having coffee today is different as compared to yesterday.
4. Perish-ability: You can store goods, but it is not so in the case of services. Services get perished immediately. 
5. Participation of customer: Customer is co-producer in production of services. For delivery customer involvement is as important as is of the service provider. For example if you went to a parlour for haircut, how it cannot be possible without your presence and involvement.
6. No ownership: In the sale of services, transfer of ownership not take place. It means to say that consumer never own the services.

Marketing of Services

A different marketing approach is necessary for services marketing, because services differ from goods in many respects.

Customer Service in a service firm is highly interactive in nature. Customer interacts with the firm physical facilities, personnel, and tangible elements like the price of the service. The success of any service firm depends on how its performance is judged and perceived by the customer. Today, Service Firms are becoming highly competitive, so, it is essential for service firms to provide high quality services for their survival.

An expanded marketing mix for services was proposed by Booms and Bitner (1981), consisting of the 4 traditional elements product, price, place, and promotion and three additional elements physical evidence, participants, and process. These additional variables beyond the traditional 4 P’s distinguish ‘customer service’ for service firms from that of manufacturing firms.

The marketing concept dictates that marketing decisions should be based upon customer needs and wants. Buyers purchase goods and services to satisfy their needs and wants. Thus when a buyer engages in a market transaction he perceives a bundle of benefits and satisfactions to be derived from that transaction. However he does not usually divide the market offering into its component parts.

From the sellers’ view point however the market offering can be divided into its component parts. The marketing mix is the convenient means of organizing all the variables controlled by the marketer that influence transactions in the marketplace. It is a ‘checklist approach’ where marketer’s attempt to list and organize the variables under their control which may be important in influencing transactions in the market place.

The formulation process of marketing mixes in services markets is much the same as in other types of markets typically this involves:

(a) Separating the offering into its components or sub mixes;

(b) Coordinating the sub mixes into the marketing mix.

The specific marketing mix adopted by a particular organization will of course vary according to circumstances (e.g. level of demand, range of service being offered). The marketing mix process then is a constant one of fashioning and reshaping the component elements in response to changing market circumstances and needs.

Inevitably there is much overlap and interaction between the various components of a marketing mix. Decisions cannot be made on one component of the mix without considering their impact upon the other components.

Also the precise elements and their importance within any marketing mix at any point in time will vary. The outline that follows therefore indicates some of the key areas to which marketing managers need to devote their attention in formulating their marketing mixes for services markets. It is illustrative not comprehensive. Service organizations will almost certainly need to adapt it in their strategy planning.

Marketing Mix:

1. Product:

The service product requires consideration of the range of services provided, the quality of services provided and the level of services provided. Attention will also need to be given to matters like the use of branding, warranties and after-sale service. The service product mix of such elements can vary considerably and may be seen in comparisons of service range between a small local building society and one of the largest in the country; or between a small hotel offering a limited menu range and a four star hotel offering a wide range of meals.

2. Price:

Price considerations include levels of prices, discounts allowances and commissions, terms of payment and credit. Price may also pay a part in differentiating one service from another and therefore the customers perceptions of value obtained from a service and the interaction of price and quality are important considerations in many service price sub mixes.

3. Place:

The location of the service providers and their accessibility are important factors in services marketing. Accessibility relates not just to physical accessibility but to other means of communication and contact. Thus the types of distribution channels used (e.g. travel agents) and their coverage is linked to the crucial issue of service accessibility.

4. Promotion:

Promotion includes the various methods of communicating with markets whether through advertising, personal selling activities, sales promotion activities and other direct forms of publicity, and indirect forms of communication like public relations.

Expanded mix for services:

Because services are usually produced and consumed simultaneously, customers are often present in the firm’s factory, interact directly with the firm’s personnel, and are actually part of the service production process. Also, because services are intangible customers will often be looking for any tangible cue to help them understand the nature of the service experience.

These facts have led services marketers to conclude that they can use additional variables to communicate with and satisfy their customers. For example, in the hotel industry the design and decor of the hotel as well as the appearance and attitudes of its employees will influence customer perceptions and experience.

Acknowledgment of the importance of these additional communication variables has led services marketers to adopt the concept of an expanded marketing mix for services shown in the three remaining columns in Table 2.1. In addition to the traditional four Ps, the services marketing mix includes people, physical evidence, and process.

5. People:

All human actors who play a part in service delivery and thus influence the buyer’s perceptions: namely, the firm’s personnel, the customer, and other customers in the service environment. All of the human actors participating in the delivery of a service provide cues to the customer regarding the nature of the service itself. How these people are dressed, their personal appearance their attitudes and behaviors all influence the costumers perceptions of the service.

The service provider or contact person can be very important. In fact, for some services, such as consulting, counselling, teaching, and other professional relationship – based services, the provider is the services. In other cases the contact person may play what appears to be a relatively small part in service delivery, for instance, a telephone installer, an airline baggage handler, or an equipment delivery dispatcher. Yet research suggests that even these providers may be the focal point of service encounters that can prove critical for the organization.

6. Physical Evidence:

The environment in which the service is delivered and where the firm and customer interact, and any tangible components that facilitate performance or communication of the service. The physical evidence of service includes all of the tangible representations of the services – such as brochures, letterhead, business cards, report formats, signage, and equipment. In some cases it includes the physical facility where the service is offered, for example, the retail bank branch facility.

In other cases, such as telecommunication services, the physical facility maybe irrelevant..In this case other tangibles such as billing statements and appearance of the repair truck may be important indicators of quality. Especially when consumers have little on which to judge the actual quality of service they will rely on these cues just as they rely on the cues provided by the people and the service process. Physical evidence cues provide excellent opportunities for the firm to send consistent and strong messages regarding the organization’s purpose, the intended market segments, and the nature of the service.

7. Process:

The actual procedures, mechanism and flow of activities by which, the service is delivered the service delivery and operating systems. The actual delivery steps the customer experiences, or the operational flow of the service, will also provide customers with evidence on which to judge the service.

Some services are very complex, requiring the customer to follow a complicated and extensive series of actions to complete the process. Highly bureaucratized services frequently follow this pattern, and the logic of the steps involved often escapes the customer.

Another distinguishing characteristic of the process that can provide evidence to the customer is whether the service follows a production-line/standardized approach or whether the process is an empowered/customized one. None of these characteristics of the service is inherently better or worse than another.

Rather, the point is that these process characteristics are another form of evidence used by the consumer to judge service. For example, two successful airline companies, Southwest in the United States and Singapore Airlines, follow extremely different process models. Southwest is no-frills (no food, no assigned seats), no exceptions, low-priced airline that offers frequent, relatively short length domestic flights.

All of the evidence it provides is consistent with its vision and market position. Singapore Airlines, on the other hand, focuses on the business traveler and is concerned with meeting individual traveler needs. Thus, its process is highly customized to the individual, and employees are empowered to provide nonstandard service when needed. Both airlines have been very successful.

The three new marketing-mix elements (people, physical evidence, and process) are included in the marketing mix as separate elements because they are within the control of the firm and any or all of them may influence the customer’s initial decision to purchase a service, as well as the customer’s level of satisfaction and repurchase decisions.

Certainly Marketing managers in services markets need to undertake research about the markets and market segments for which their respective marketing mixes are shaped. Wherever possible the services marketing manager will need to research and analyses the characteristics of the markets served. It is these problems of conducting such analysis and research.

1. Developing a marketing strategy involves two tasks. These are selecting target markets and formulating marketing mixes.
2. In services marketing adaptations and adjustments may be required, although the processes of devising marketing strategies and formulating marketing mixes are similar irrespective of market type.
3. In the analytical stage preceding strategy formulation, common questions posed about all products may give rise to different answers for services.
4. The marketing mix may have to be revised for use in services contexts. In particular people, processes and physical evidence may have to be incorporated into the marketing mix framework.

In order to be able to make a clear and relevant classification of services, we would first need to understand the concept of the word itself. Services usually refer to processes and not physical products. To understand more, read this article on difference between goods and services. Some services may include people whereas other services (like online services) may including objects which are managed by people.

Examples of services which include people can be a hair salon, education, theater, restaurants, and public transportation. On the other hand services that include objects include repairs and maintenance, dry cleaning, banking, legal services, insurance, etc.

1. Classification of service based on Tangible Action

Wherever people or products are involved directly, the service classification can be done based on tangibility.

(i) Services for people: Like Health care, restaurants and saloons, where the service is delivered by people to people.

(ii) Services for goods: Like transportation, repair and maintenance and others. Where services are given by people for objects or goods.

2. Classification of services based on Intangibility

There are objects in this world which cannot be tangibly quantified. For example  the number of algorithms it takes to execute your banking order correctly, or the value of your life which is forecasted by insurance agents. These services are classified on the basis of intangibility.

(i) Services directed at people’s mind: Services sold through influencing the creativity of humans are classified on the basis of intangibility.

(ii) Services directed at intangible assets: Banking, legal services, and insurance services are some of the services most difficult to price and quantify.

The most intangible form of service output is represented by information processing. The customer’s involvement in this type is service is not required. Generally, customers have a personal desire to meet face to face but there is no actual need in terms of the operational process. Consultancy services can be an example of this type of services where the relationship can be built or sustained on trust or telephone contact. However, it is more indicated to have a face-to-face relationship in order to fully understand the needs of the customer.

A more general classification of services based on the type of function that is provided through them can be as follows:

• Business services.
• Communication services.
• Construction and related engineering services.
• Distribution services.
• Educational services.
• Environmental services.
• Financial services.
• Health-related and social services.
• Tourism and travel-related services.
• Recreational, cultural, and sporting services.
• Transport services.
• Other services not included elsewhere.

7 Important Characteristics of Services

(i) Perish-Ability

Service is highly perishable and time element has great significance in service marketing. Service if not used in time is lost forever. Service cannot stored.

(ii) Fluctuating Demand

Service demand has high degree of fluctuations. The changes in demand can be seasonal or by weeks, days or even hours. Most of the services have peak demand in peak hours, normal demand and low demand on off-period time.

(iii) Intangibility

Unlike product, service cannot be touched or sensed, tested or felt before they are availed. A service is an abstract phenomenon.

(iv) Inseparability

Personal service cannot be separated from the individual and some personalised services are created and consumed simultaneously.

For example hair cut is not possible without the presence of an individual. A doctor can only treat when his patient is present.

(v) Heterogeneity

The features of service by a provider cannot be uniform or standardised. A Doctor can charge much higher fee to a rich client and take much low from a poor patient.

(vi) Pricing of Services

Pricing decision about services are influenced by perish-ability, fluctuation in demand and inseparability. Quality of a service cannot be carefully standardised. Pricing of services is dependent on demand and competition where variable pricing may be used.

(vii) Service quality is not statistically measurable

It is defined in form of reliability, responsiveness, empathy and assurance all of which are in control of employee’s direction interacting with customers. For service, customer’s satisfaction and delight are very important. Employees directly interacting with customers are to be very special and important. People include internal marketing, external marketing and interactive marketing.

The following are the characteristics of services:

1. Intangibility:

Services are intangible and therefore cannot be touched, handled, smelt or tasted (physical senses). This is because service itself is an activity. A service however, can be experienced. A service also gives a certain amount of satisfaction to the consumers. On account of the intangibility, there is no ownership created in case of services. A service can only be generated and used and can never be owned.

2. Perishability:

A service has to be consumed simultaneously with its production. A service cannot be stored like a tangible commodity. Services are perishable in terms of delivery and time. An empty seat on a plane never can be utilized and charged after departure. Revenue once lost is lost forever.

When the service has been completely rendered to the requesting service consumer, this particular service irreversibly vanishes as it has been consumed by the service consumer. Example – after the passenger has been transported to the destination, he cannot be transported again to the previous location at the previous point of time.

3. Inseparability:

Commodities once produced can be sold at a later point of time but in case of services it is not possible. Examples – In the cases of services of a doctor to his patient, teacher to his student, the simultaneous presence of both-the producer of the service and the consumer of the service at that point of time is absolutely necessary.

The service provider is indispensable for service delivery as he must promptly generate and render the service to the requesting service consumer. Therefore the service provider, the service itself and the service consumer are inseparable.

4. Simultaneity:

Services are generated and consumed during the same period of time. As soon as the service consumer has requested the service (delivery), the particular service must be generated from scratch without any delay. The service consumer instantaneously consumes the rendered benefits to satisfy his wants. Therefore the production and consumption of services are always simultaneous.

5. Variability:

Each service is unique. Services lack homogeneity. Example – a doctor treats two patients with similar ailments on the same day. The level of satisfaction in the minds of these patients after the treatment will never be the same. The difference is caused by factors such as the mood of the doctor, the fatigue level of the doctor, the way the service is perceived by the individual patient etc. There will a difference in the service even if the same doctor treats the same patient on two different occasions.

This is because the moods of the doctor and the patient do not remain the same on both the occasions. No two units of service are identical even if they are generated by the same person. Factors like quality control, standardization etc. which can be very successfully implemented in case of production of tangible goods cannot be applied in case of services. Services always vary with each other.

6. Ownership:

No ownership is created in case of services. At the time of creating a service or delivering a service, the service provider does not own the service. He only owns the physical infrastructure necessary to create the service. Similarly at the time of consumption or after the consumption, the service consumer does not own the service. He only consumes the service.

After the consumption, the consumer has only the experience but the service itself would have become non-existent. A service cannot be owned by anybody because it is basically an intangible product.