Financial Daily from THE HINDU group of publications
Monday, Dec 06, 2004
Financial Daily from THE HINDU group of publications Monday, Dec 06, 2004 |
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Mentor
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Management Columns - Racy Cases Products are services, and services are products
A. V. Vedpuriswar
But Sam pooh-poohed Chatshow saying he could handle them all. Like Chatshow, Sam was a popular teacher with an engaging pedagogue. After proudly introducing himself to the class as Service Sam, he briefly outlined the course content and the grading mechanism. And then got into his interactive stride. Sam: Do you think you will benefit from this course? Class: (in chorus): Yes sir. Sam: How? Class: Sir, today's economy is a service economy. In most developed countries, services account for more than 70 per cent of GDP. India too is heading in that direction. The best jobs are lying in services. Service is to sunrise as manufacturing is to sunset. This course is going to add a lot of value for us. Sam was happy with the response. But he was alarmed at hearing the jargon "adding value". He was convinced that these MBA blokes used the term loosely without really understanding what it meant. So he got into his next volley of questions. Sam: Why do we need a separate subject called service marketing? Class: Because services are different from products. Sam: Pray how? Class: Sir, a product is tangible. A service is not. A service cannot be seen. It cannot be tasted. It cannot be felt. It cannot be heard. It cannot be smelt. Sam: Any more differences? Class: Services are delivered and consumed instantaneously. Products are manufactured, stored as inventory, distributed through channels and consumed many days later. Sam was impressed. These guys seemed to know their marbles. Most importantly the answers were coming from different directions of the class. This was very unlike some other classes where a bloke or two would dominate the chat. It was a joy to teach a bunch of highly motivated students. Sam: Is that all folks? Class: There is a high degree of variability in the case of services. Here "people" play a crucial role. This is not so true of products. The quality of a service is people centric. If a chef changes in a restaurant, I may not visit the restaurant again. Class: A barber leaves the saloon. I will get my hair dressed in the new saloon where my favourite barber has relocated. My auditor changes his firm and I shift to the new firm. Different people deal with customers in different ways Sam: Well anything else? Class: Services are perishable. They cannot be stored. An empty seat on an airline flight is lost forever. Sam was thrilled by the way the class was progressing. It looked like the guys hadn't forgotten Philip Kotler whose colourful book they had read in the first year basic marketing course. He complemented them on their quick response and good grasp of basic marketing concepts. Smiles were exchanged amongst students across the oval shaped classroom that had gallery type seating and which accommodated 90 students. Sam mentally heaved a sigh of relief. He seemed to have got the class on his side. That was when the jean clad, mop haired, bespectacled Bhoka spoke up. He gave both Sam and the class a jolt. Bhoka: Sir, can I make a point? Sam: Sure, go ahead. Bhoka: I don't think there is any difference between a product and a service. Sam (a shade irritated): Can you elaborate? Bhoka: Let me take the first point. A service can also be tangible. Take McDonald's. It is in the services business but what it makes are burgers. Burgers are as tangible as anything else. Sam: Continue. Bhoka: Two, like products, services can also be stored. A software is stored on a computer. Many routine responses to customer queries in the tourism industry are stored in databases. Automated responses drive customer service in several service industries, including airlines and banks. Sam: Third point? Bhoka: I do not think people are any the less critical in the case of products. Like you need good doctors to run hospitals, you need good people to design, manufacture and market products. Surely people played a key role when Tata Motors designed the Indica? And when Sony designed the Walkman? Sam was beginning to get the jitters. Bhoka continued: "Products can be as perishable as services. A vegetable is a product. A vegetable vendor has to sell it by the end of the day. A newspaper is a product. A newspaper boy has to sell it the same day. Laptops are products. They have to be sold within a reasonable time. If microprocessor technology changes, laptops lose value sharply. That is why a company like Dell has pioneered the build-to-order, direct selling model". The class was getting excited. Bhoka, like Sachin Tendulkar, in full flow, was always a pleasure to watch. And here he was challenging the natty professor, in a way only he could. Well, what had he said? "Services can also be tangible". "Services can also be stored". "People are important everywhere". And "products are also perishable". Sam was looking like a wounded tiger. And feeling like a confused scientist. Bhoka seemed to have demolished all the concepts, Sam held sacred. Did this mean that there was no difference between products and services? No service economy? No knowledge economy? The gong went and Sam ran for cover. Of course the class didn't know that. Sam had a reputation. And the class believed that like a master storyteller Sam had timed it in such a way that he would offer the answers the next week. Only Sam knew that he had no answers! He had to find them. Well, he had better find them.
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