Introduction to Services

A service is the non-ownership equivalent of a good. Service provision has been defined as an economic activity that does not result in ownership and is claimed to be a process that creates benefits by facilitating either a change in customers, a change in their physical possessions, or a change in their intangible assets. By composing and orchestrating the appropriate level of resources, skill, ingenuity and experience for effecting specific benefits for service consumers, service providers participate in an economy without the restrictions of carrying stock (inventory) or the need to concern themselves with bulky raw materials. On the other hand, their investment in expertise does require consistent service marketing and upgrading in the face of competition which has equally few physical restrictions. Many so-called services, however, require large physical structures and equipment, and consume large amounts of resources, such as transportation services and the military.

Service Characteristics

A service is an act or performance offered by one party to another. The performance is essentially intangible and does not result in ownership of any factors of production. Not like most products, services are inseparable, variable and perishable.

  1. Intangibility of service: Service cannot be defined as physical attributes because it cannot be seen, tasted, felt, heard, touched or smelled before it is bought, so it is difficult for consumers to tell in advance what they will be getting. The experience consumers obtain from the service has an impact on how they will perceive it. And perceived service is risky and difficult to evaluate, customer tend to rely more on personal references, reputation, facilities of the service provider as an indication of quality. Service marketers identify the feelings that they want the customer to experience as a result of the service. They stress the positive elements of tangibility in the service, make all communications with the customer very clear and focus constantly on service quality. For example when anybody buys a car, he/she takes it to test drive, if they like it than only pay and buy the car ,never pay for test drive. But if you buy a meal at a restaurant, you do not know what is going to serve. Now buyers only look at tangible evidence like cleanliness, decoration, staff movement, which provide the information of quality of intangible service.
  2. Inseparability of service: Services cannot be separated from the service supplier. It is labor intensive. After it is sold, the customer can not be taken away from the producer it is simultaneously produced and consumed. It is being produced at the same time that the customer is receiving. So customer is also part of the product. For example in a restaurant, you order your meal, during the time of waiting and delivery of the meal, the service provided by the service provider is all part of the service production process and is inseparable, the staff in a restaurant are as part of the process as well as the quality of food provided.
  3. Perishability of service: a characteristic of services unused capacity cannot be stored or saved for future sale or use, it perishes after a specific time. For example a 200 room hotel that only sells about 160 rooms for particular night. It can not inventory the remaining 40 rooms and sell them next night; revenue lost from these 40 unsold rooms is gone forever, because of perishable character of service. same in a play ground or airlines, where if a match is held today and few seats are not sold lets take because of less popular team are playing these seats can not be sold in next match. And in airlines also for a destination all seats are not sold, revenue will be gone once journey over, so if these seats were sold even at low price some revenue could have earn. Thus service is perishable; it perishes if it is not used at particular time.
  4. Heterogeneity or variability of service: It is very difficult to make each service experience identical, since services are not produced by a single entity and then distributed to consumers, the quality of services may vary depending on who provides the service as well as when, where, and how they are provided. There is a strong possibility that the same question would be answered slightly differently by different people and even by the same person at different times. A guest can receive excellent service one day and not that good another day from the same person, because service person may have some personal problem or not have felt well. If travelling by plane the service quality may differ from the first time you traveled by that airline to the second, because the airhostess is more or less experienced.
  5. Simultaneity of service: Services are being produced and consumed at the similar time. You buy not just the service but also a section of how the service is created and delivered. Services companies cannot classify functions like sales, customer service, etc. like you can in manufacturing. Yes, they still possibly need a marketing department, but all workforce who deal with customers need to be well informed.

Service-Goods Continuum

The dichotomy between physical goods and intangible services should not be given too much credence. These are not discrete categories. Most business theorists see a continuum with pure service on one terminal point and pure commodity good on the other terminal point. Most products fall between these two extremes. For example, a restaurant provides a physical good (the food), but also provides services in the form of ambience, the setting and clearing of the table, etc. And although some utilities actually deliver physical goods – like water utilities which actually deliver water – utilities are usually treated as services. In a narrower sense, service refers to quality of customer service: the measured appropriateness of assistance and support provided to a customer. This particular usage occurs frequently in retailing.

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