Meaning of Service
Services are the intangible products offered by company to his clients for satisfaction of their needs. It can be any type of benefit or activity that is provided by one party to another party and does not involve any transfer of ownership. Service are inseparable in nature which can’t be separated from its provider. It is must for every service provider to be present at the point of consumption for fulfilling the needs of customer as services are created via direct interaction between two. Services essentially does not have any physical existence unlike tangible goods that can be seen and touched by people. These economic activities create value for customers by facilitating such outcomes that they are willing to attain without involving themselves into specific risks and cost. Services cannot be stored in advance of their requirement and are consumed at point of their production only. These intangible products may or may not be tied to physical products for making sales. Wide range of services offered by business enterprises are teaching, medical treatment, transportation, banking, telecom, courier and DTH services.
Characteristics of Services
- Intangibility- Services are intangible in nature which does not have any physical existence unlike tangible goods. These non-physical products cannot be seen, touched, taste and smell by customers. Service is an abstract phenomenon where client experience some benefits by consuming them. Business cannot give demonstration or sample of these intangible products to customers.
- Perishability- This is one of the most important characteristics of intangible goods. Service are highly perishable in nature which cannot be stored for later use like in case of perishable products. It can’t be saved, returned or resold once they are rendered by business to customer. Services need to be compulsorily consumed within a particular time period and if not used timely is lost forever.
- Variability- Services are highly variable in nature whose quality differs from one provider to another. These are great variations in service quality depending upon by whom it is provided, where, when and in what manner. Features of service cannot be standardized like tangible goods where person gets equal level of satisfaction every time he/she consumes it.
- Lack of ownership- There is no transfer of ownership in case of sales of services to clients. Services cannot be owned by customer nor they cannot be transferred to some another person. These are actually used at a particular period of time or hired for some time by clients.
- Inseparability- Services and their provider are inseparable which cannot be separated from one another. These are produced and consumed at a same point of time. Service provider need to be contacted every time the consumer is willing to avail the services. Presence of these providers is must for delivering services to clients.
- Fluctuating demand- Services have high degree of fluctuations in their demands. Demand of these intangible products rises abnormally during the peak season and is low during the off-periods. These fluctuations in demand cannot be seasonal or by weeks, days and hours.
- Difficult to measure quality attributes- Quality of services cannot be measured statistically like in case of tangible goods. Here, quality attributes cannot be put into a form of data for carrying out analysis. Services cannot be taken by quality specialists for doing inspection and making observations in a laboratory due to lack of physical attributes.
- Direct interaction between producer and customer- There is a direct interaction in between the producer of service and customer in case of services. The producer develops a personal relation with clients where they offer services as per the needs of people. Whereas in case of tangible items, goods reach customers via intermediaries and there is no direct interaction with producer.
Classification of Services
The classification of services is mainly made on 2 bases which are discussed below: –
- Classification made on the basis of tangible action
- Classification made on the basis of intangibility
Service classification based on tangible action- These are the type of services provided in which people or products are directly involved. These services are one which are delivered either for peoples or for physical products.
- Services for people: Such services are delivered by people to people and includes a wide range such as saloon, restaurants, healthcare, teaching services etc.
- Services for products: It include those services which are given by people for objects or products such as repair, maintenance, dry cleaning, transportation etc.
Service classification based on Intangibility- These are the services which involves various intangible aspects that cannot be physically quantified.
- Services directed at people’s mind: Services which are sold via influencing the human’s creativity are classified on intangibility basis.
- Services directed at intangible assets: These are services which are difficult to quantify or price like legal services, insurance services and banking services.