The Opportunities and Problems in Making Services More Tangible
Chandhaluk Heesawat (Ph. D.)
Assumption University
bp3905@yahoo.com
Abstract. This paper gives the readers the background to understand how intangibility of services
affects customers’ evaluation of service quality. The paper begins with the various views regarding
intangibility of services from scholars. Some view intangibility as important characteristics in
distinguishing products from services. Others look at intangibility as insufficient condition to divide
products and services. Then, the two main approaches of tangibilization, operation-based and
marketing-based tangibilization are examined. The opportunities and problems in tangibilizing
services are followed. Next, managerial implications tell marketing practitioners how they should
exploit the opportunities and minimize the impacts of tangibilization problems. The paper is ended
with the future research to give readers the list of unanswered questions in the areas of service
tangibilization.
1. Introduction
Among the four characteristics; intangibility, inseparability,
variability, and perishability; which differentiate products
from services, there is argument that the single most important
characteristic is intangibility. Moreover, it has been said that
intangibility is the key to determining whether or not an
offering is a service or product (Zeithaml and Bitner, 1996).
Indeed, the broad definition of services implies intangibility as
a key determinant of whether an offering is a service or not
(Oberoi and Hales, 1990; Zeithaml and Bitner, 1996). This
intangibility characteristic has a profound effect on the
marketing of services (Lovelock, 1991; Rushton and Carson,
1989). This characteristic, intangibility, has been found in
many literatures to be the most likely reason for the other three
characteristics; inseparability, variability, and perishability.
However, some scholars have argued that the
intangible-tangible dimension is difficult for consumers to
understand, and that the importance of intangibility might
have been overemphasized (Bowen, 1990; Wyckham et al.,
1975). They proposed that the service provider's offer is their
"productive capacity", rather than the tangible or intangible
nature of the offer. In other instances, some scholars claim
that it is nearly impossible to say that a certain business
offering is pure product or pure service. The use of
products/services bundle is proved to be more usable than the
traditional approach of categorizing products and services and
their tangibility/intangibility. The products/services bundle
refers to the inseparable offering of many goods and services
(Gronroos, 1977; Levitt, 1980, 1981). This fact, which has
been recognized in the classification scheme of others,
suggests that the conceptualization of "the bundle" may not be
separable in the consumer's evaluation of service quality. This
results in a product and service continuum, where highly
tangible goods are placed at one end of one continuum, and
highly intangible services are placed at the opposite end, and
the goods service bundle is located somewhere in between the
two.
Despite contradictory opinions regarding the uses of
tangibility and intangibility to differentiate services, the
attempts to make services more tangible proves to produce
fruitful results in the marketing of services. This paper
explores the opportunities and problems in doing so. Also, the
paper provides some managerial implications for marketing
practitioners.
2. Approaches to Service Tangibilization
There are two main approaches to service tangibilization.
Operation-based tangibilization (OBT) means the attempts to
tangibilize operational activities conducted by service firms
during the service encounter process to decrease clients' sense
of intangibility after the encounter. For example, Parasuraman
et al. (1985) and Fitzsimmons and Fitzsimmons (1994)
defined tangibility by examining the extent to which hotel
interiors are well decorated and whether the employees are
dressed in uniforms where the clients are staying. The other
type of tangibilization is called Marketing-based
tangibilization (MBT), which assists the service providers in
unifying consumers' expectation, decision analysis, and
evaluation (EDEM) via marketing efforts. Examples of
marketing-based tangibilization practices are pictures of
tangibilized equipment and decoration at the points of services
or in marketing materials. MBT is beneficial in lowering, or
even unifying, EDEM among the consumers and market
segments. Hence, these actions enlarge the market scale, raise
the standardization of services, and consequently reduce costs
and overhead. There are 6 strategies for marketing-based
tangibilization. First, Quantitation means the techniques that
represent service contents with quantitative cues, such as
numbers, statistics, measures, and other numerical data.
Management academicians take quantitation as a synonym for
Proceedings of the International Conference on Computer and Industrial Management, ICIM, October 29-30, 2005, Bangkok, Thailand
18.1
clearness, preciseness, accuracy, definitude, and even explicity
(David, 1999). From the practical perspective, service cues
such as price, history of the providers, financial and capital
conditions, amount of employees and existing clients, and
other quantifiable information are the practices (Grove et al.,
1995). If services can be portrayed and illustrated with
quantitative cues, then it is easy for consumers to perceive
exact conditions of services, and hereafter feel the services to
be tangible. Second comes ranking, which is defined as a
service provider's relative order in contrast with competitors or
its counterparts by comparing the service contents. The
ranking for top 50 education institutes is a typical example of
ranking. Third, factualization is the technique that service
providers use to illustrate their services by a literal proclaimed
statement, illustration, and representation such as figures,
pictures, and images, properly setting and equipping at a point
of service and a demonstration of services, among others.
Fourth, substantialization is the technique for presenting a
concrete abstract image and invisible resource of service
providers. At the fifth position lies, word-of-mouth effect
(WOM), which is an essential element in the academy of
consumer behaviors and service marketing. WOM can help to
forge a referral network to deliver values and benefits of
services. WOM is helpful in lowering consumers' perception
of risk, reducing suspicion toward the services, and
stimulating them to switch brands and unify EDEM
differences among the consumers. In practice, WOM indeed
represents great effects in promotional activities. Lastly,
information frequency refers to the amount and density of
service information delivered to consumers, including
frequency of advertising, the number of visiting times by the
sales force, and the frequency of provider-client encounters. In
marketing-related fields, the literature always asserts the
effects of a large amount and high density of information
(Jacoby, 1984; Keller and Staelin, 1987).
3. The Opportunities
Making services more tangible seems to ease up the evaluation
of service quality. When services are more tangible, the
degree of their variability will be significantly reduced,
making the evaluation of service quality more objective.
Service quality is normally measured by the level of
discrepancy between consumer expectations or desires and
their perceptions of what they received, as described by the
SERVQUAL scale. According to SERVQUAL, there are five
dimensions by which consumers evaluate service quality:
Tangibles, Reliability, Responsiveness, Assurance, and
Empathy. In case service transactions are divided into 3
phases: Pre-transaction, transaction, and Post-transaction.
Reliability largely concerns whether the outcome of service
delivery was as promised. The other four dimensions concern
the process of service delivery, or how the service was
delivered (the main transaction) (Berry and Parasuraman,
1991). According to the SERVQUAL model, customer
assessments of service quality result from a comparison of
service expectations with actual performance.
In the pre-transaction element of service provision,
tangibilization plays an important role. Service marketers face
a significant challenge when it comes to communicating the
intangible benefits of a service to their target audience
(Mattila, 2000). Hence, the proposition that advertising should
strive to add tangibility to the service offering (Berry and
Clark, 1986; Onkvisit and Shaw, 1989; Stafford, 1996) is very
common in service literature. Ostensibly, such an effort can
help customers mentally grasp a product whose core lacks a
physical reality (George and Berry, 1981; Shostack, 1977;
Upah, 1983). Further, adding tangibility through advertising
may help to address customers' high degree of perceived risk
with service products (Bateson, 1995; Clow et al., 1999;
Guseman, 1981; Lovelock and Wright, 1999; Murray, 1991;
Zeithaml, 1981).
Many research studies propose that intangibility makes
consumers feel risky, decreases trust to providers, and forces
each consumer to form his/her own psychological condition
(Bateson, 1977; Guseman, 1981), thus producing unmet
consumer satisfaction (Bebco, 2001). Service tangibilization
could decrease consumers' sense of risk and uncertainty
toward services before their consumption. Intangibility also
makes it difficult for consumers to form an expectation toward
services or form them by mistake, hence the service providers
fail to grasp consumers' expectations precisely. Most studies
in the related literature consider expectation as a major
antecedent of consumer satisfaction (Oliver. 1980; Bebco,
2001). If consumers are not able to form their expectation
correctly before the services are provided, even if the service
quality is good, then it is possible that consumers' evaluation
toward service quality will be misled or hindered due to a
misexpectation. Therefore, tangibilization practices are helpful
to build consumers' expectation, and therefore raise their
service satisfaction. When the intangibility of the process and
outcome of a service increase, the consumers' expectations of
quality also increase. Specifically, the consumers' expectations
increase for reliability, assurance, responsiveness and
empathy. As the desired expectations increase, there is a
greater chance that the provider will not be able to meet them.
In conclusion, tangibility helps form a more objective
expectation about service quality. It reduces the chance of
customers’ misperception of service quality. With tangibility,
there is more chance for firms to satisfy customers leading to
the chance to earn more profits.
4. The Problems
The approach to which services are tangibilized may lead to
problems. Operation-based tangibilization fails to give
"predetermined advantages" to providers. It can only satisfy
existing consumers while neglecting to attract potential ones
(Mullins, 1993). In the same way, because intangibility leads
to divergent expectation, decision analysis, and evaluation
models (EDEM) among consumers (Bateson, 1977; Guseman,
1981), tangibilization could assist to unify, or at least to lower,
the EDEM difference level. However, operation-based
tangibilization, at most, helps existing consumers to evaluate
the services, while it fails to converge EDEM among
consumers. Operation-based tangibilization might be effective
in offering better consumer evaluations toward service quality,
yet it fails to help to converge consumers' EDEM, especially
potential consumers. Firms utilizing only OBT have lower
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18.2
chance to increase customer satisfaction compared with those
using MBT or MBT in combination with OBT.
5. Managerial Implications
Expectations play a major role in determining consumers'
post-consumption service quality evaluations. It is therefore
important that the service marketer understands these
expectations across the intangibility continuum. When service
providers know the consumer's quality expectations, they are
in a position to develop marketing strategies for service
delivery. At this point, it appears that the first task for the
service provider is to define adequately the service which is
being delivered to the consumer. One must determine whether
the outcome of the service act results in a tangible possession,
an intangible or a service - product bundle. Next the service
provider must determine whether the process is or is not
experienced by the consumer. The tangibility index and the
tangibility-intangibility matrix are a good starting point for
this analysis. Understanding the range of consumer
experiences and service outcomes as they relate to
intangibility will assist the service provider in planning
strategic marketing options for the service. If intangibility
increases a consumer's perception of risk, then the promise of
reliability should reduce it. Being reliable and becoming
known for reliability in the service arena reduces a customer's
expectations by reducing the need for service recovery (Berry
and Parasuraman, 1991). However, businesses need to be
cautious in promoting their reliability. Overstating or
exaggerating claims concerning reliability can have the effect
of raising consumer expectations unnecessarily. Businesses
should work on being reliable first, then work on letting the
consumers know about it through MBT. Insuring reliability
means a management commitment to service quality. As in the
production of tangibles, the production of intangibles requires
standardization
without
compromising
customization
potential. Standardization of services requires the use of hard
and soft technologies to provide consistent service to
customers. Hard technologies, or replacing company
personnel with machines, can help insure reliability of routine
tasks. This also helps free company personnel to interact with
customers. Soft technologies, or using a formal protocol for
handling routine work, also helps insure the quality
performance of services. As intangibility of the service
increases, consumer expectations increase. Therefore,
standardization should be implemented whenever possible in
order to meet the consumers' increased expectations for
reliability. Once reliability has been established, becoming
known for reliability can be achieved both by consumer wordof-mouth communication and strategic marketing efforts. A
service can increase the consumers' perception of the
reliability of a service through both explicit and implicit
service promises. Implicit service promises may be
represented by tangibles and serve as evidence or cues for
quality. These cues which lead to inferences about what the
service should or will be, serve as evidence of quality thereby
reducing risk for the consumer (Berry and Parasuraman,
1991). Cues for reliability will take on a different level of
importance for each service. The implicit cues which serve as
evidence of quality for a hospital may be sparkling clean
facilities and white uniforms (Bebko and Downing, 1994).
These same cues will probably not have the same impact on a
consumer's perception of reliability for an auto mechanic as
they do for a hospital. Each service needs to undertake the task
of determining which cues are relevant and connote reliability
to the consumer. But what if the service fails to deliver what
the consumer expects? While the probability of loss occurring
decreases with increased reliability, up to one half of service
resolutions fail (Andreason and Best, 1977). Many of the
criteria which consumers use in their evaluation involve how
well they are able to recover if service failure occurs.
Reducing the risk of loss (unreliable service delivery) is a
matter of decreasing the value of the potential loss and/or
reducing the probability of a loss occurring.
6. Future Research
Research findings on intangibility, risk, uncertainty and
expectations show mixed conclusions. While a recent study
has shown that uncertainty is negatively associated with
prepurchase expectations in industrial buying situations
(Paterson et al., 1997), risk management principles state that
an investor's expectation for a high rate of return should
increase as the probability of loss increases. The association of
intangible services, uncertainty, risk and expectations is an
area yet to be examined in the service literature. The degree
of tangibility or intangibility does have a significant effect on
consumers' perceptions of service quality. The present
research indicates that the argument in services marketing
regarding the relative importance of tangible and intangible
elements is more complex than the current literature has
suggested. The importance of tangibility differs among
various service industries. It has been more than three decades
since academics began to realize the importance of tangibility
and intangibility. However, an understanding of tangibility
and intangibility in service industries is still in its infancy.
Certain questions present themselves. How can the tangible
elements be best demonstrated to meet customers'
expectations? What are the antecedents of customers'
perceptions of tangibility and intangibility? How is it possible
to close the gap between customers and service providers in
perceptions of the importance of tangibility? The relationship
between tangibles and other service quality dimensions, and
the effect of tangibility and intangibility on customer
expectations and perceived service quality, are fruitful areas
for further research.
7. Conclusions
Understanding the intangibility of a particular service appears
to have some level of importance in understanding consumer
quality expectations. Managing those expectations means
managing the risks a consumer faces when buying a particular
service. The service provider who is successful in managing
these risks will make it possible for consumers to paint a
realistic set of expectations for service quality.
Proceedings of the International Conference on Computer and Industrial Management, ICIM, October 29-30, 2005, Bangkok, Thailand
18.3
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