In recent years, the service sector has witnessed some extreme changes in the workplace. The emphasis on service quality in Singapore followed the shift in economic structure from a production-based economy to a knowledge-based economy.

The importance of the service sector in the Singapore economy has increased steadily over time and service industries will continue to grow in importance.

Companies are competing strategically through service. As a core business strategy, delivering quality service is essential for companies’ success and survival in today’s competitive environment.

Successful companies focus on critical success factors that drive profitability in the service paradigm of investment in people, technology that enables frontline workers to perform tasks efficiently, effective human resources policies in recruitment and training, and compensation linked to service performance of employees.

There is a rationale for distinctively managing the marketing of services because service has four unique characteristics, summarised by the acronym “IHIP”, which stands for intangibility, heterogeneity, inseparability and perishability.

1. Intangibility

Intangibility means that services cannot be counted, measured and tested before sale to assure quality as they are related to performance, rather than objects.

Because services are intangible, they are difficult to describe and communicate. Customers are searching for tangible cues to help them understand the nature of the service experience.

Tangible representations of a service include a brochure, letterhead, business cards, reports, signage, an Internet presence and equipment. For example, in the hotel industry, the design, furnishing, layout and decoration of the hotel as well as the appearance and attitudes of its employees will influence customer perceptions of the service quality and experiences.

The premises of a theme park, restaurant, health club, hospital or school are critical in communicating their services and making the entire customer experience pleasurable. Besides serving as a visual metaphor of what the company or institution stands for, the premises actually facilitate the activities of customers and employees.

Credit cards are another example of the use of tangible evidence that facilitates the provision of (intangible) credit facilities by banks and credit card companies.

2. Heterogeneity

Heterogeneity concerns the variability in the performance of services. The quality of a service (a visit to a hospital for a medical check-up, having a meal at a restaurant, accountancy and consulting services) can vary from service providers, customers and the time of the day among many other factors. Heterogeneity in service pertains to the consistency of service behaviour.

3. Inseparability

This involves the simultaneous production and consumption of services. Since the customer must be present during the production and consumption of a service (an aeroplane trip, a haircut, dining at a restaurant, a trip to an entertainment park), inseparability forces the buyer into intimate contact with the production process.

Inseparability also causes marketing and production to be highly interactive. Service providers (such as call centre personnel, cashiers, ticket takers, clerks, nurses and counsellors) are involved in real-time production of the service. Much of what makes a service special derives from the fact that it is a lived-through event.

4. Perishability

Perishability means that services cannot be saved, stored for re-use or returned. Hotel rooms not occupied and airline seats not purchased cannot be reclaimed. As services are performances that cannot be stored, it is a challenge for service businesses to manage supply and demand. Service companies frequently face situations of over- or under-demand.

The qualities mentioned above are what separate services from tangible goods. These characteristics may pose vexing problems to services marketers that are not faced by goods marketers.

Yet, they also offer opportunities for service providers to customise their services to meet the needs of their customers. In doing so, service providers face two concerns: how much customisation is possible, given the characteristics of the service and its delivery; and how much flexibility to exercise in meeting the needs and expectations of the customers.