Service
This article is about a term used in economics. For other uses, see service (disambiguation).In
economics and
marketing, a
service is the non-material equivalent of a
good.
Service provision has been defined as an economic activity that does not result in
ownership, and this is what differentiates it from providing physical goods. It 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 supplying some level of
skill,
ingenuity, and
experience, providers of a service 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 marketing and upgrading in the face of
competition which has equally few physical restrictions.
Providers of services make up the
Tertiary sector of industry.
Services can be described in terms of their main attributes.
*
Intangibility - They cannot be seen, handled, smelled, etc. There is no need for
storage. Because services are difficult to conceptualize, marketing them requires creative
visualization to effectively evoke a concrete image in the
customer's mind. From the customer's point of view, this attribute makes it difficult to evaluate or compare services prior to experiencing the service.
*
Perishability - Unsold service time is "lost", that is, it cannot be regained. It is a lost economic
opportunity. For example a
doctor that is booked for only two hours a day cannot later work those hours— she has lost her
economic opportunity. Other service examples are airplane seats (once the plane departs, those empty seats cannot be sold), and theatre seats (sales end at a certain point).
*
Lack of transportability - Services tend to be consumed at the point of "
production" (although this doesn't apply to outsourced business services).
*
Lack of homogeneity - Services are typically modified for each
client or each new situation (customised).
Mass production of services is very difficult. This can be seen as a problem of inconsistent quality. Both inputs and outputs to the processes involved providing services are highly variable, as are the relationships between these processes, making it difficult to maintain consistent quality.
*
Labour intensity - Services usually involve considerable human activity, rather than precisely determined process.
Human resource management is important. The human factor is often the key success factor in service industries. It is difficult to achieve
economies of scale or gain dominant
market share.
*
Demand fluctuations - It can be difficult to forecast
demand (which is also true of many goods). Demand can vary by
season,
time of day,
business cycle, etc.
*
Buyer involvement - Most service provision requires a high degree of interaction between client and
service provider.
The delivery of a service typically involves five factors:
* The service providers (e.g. the people)
* Equipment used to provide the service (e.g. vehicles, cash registers)
* The physical facilities (e.g. buildings, parking, waiting rooms)
* The client
* Other customers at the service delivery location
The
service encounter is defined as all activities involved in the service delivery process. Some service managers use the term "moment of truth" to indicate that defining point in a specific service encounter where interactions are most intense.
Many
business theorists view service provision as a performance or act (sometimes humorously referred to as
dramalurgy, perhaps in reference to
dramaturgy). The location of the service delivery is referred to as the
stage and the objects that facilitate the service process are called
props. A script is a sequence of
behaviours followed by all those involved, including the client(s). Some service
dramas are tightly scripted, others are more
ad lib.
Role congruence occurs when each
actor follows a script that harmonizes with the
roles played by the other actors.
In some service industries, especially health care, dispute resolution, and social services, a popular concept is the idea of the
caseload, which refers to the total number of patients, clients, litigants, or claimants that a given employee is presently responsible for. On a daily basis, in all those fields, employees must balance the needs of any individual case against the needs of all other current cases as well as their own personal needs.
Under
English law, if a service provider is induced to deliver services to a
dishonest client by a deception, this is an offence under the
Theft Act 1978.
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.
The following is an incomplete list of
service industries, grouped into rough sectors. Parenthetical notations indicate how specific
occupations and
organizations can be regarded as service industries to the extent they provide an intangible service, as opposed to a tangible good.
* business functions (that apply to all organizations in general)
**
consulting**
customer service **
human resources administrators (providing services like ensuring that employees are paid accurately)
*
child care*
cleaning,
repair and maintenance services
**
janitors (who provide cleaning services)
**
gardeners
**
mechanics
*
construction**
carpentry**
electricians (offering the service of making wiring work properly)
**
plumbing* death care
**
coroners (who provide the service of identifying
corpses and determining time and cause of death)
**
funeral homes (who prepare corpses for public display, cremation or burial)
*
dispute resolution and prevention services
**
arbitration **
courts of
law (who perform the service of dispute resolution backed by the power of the
state)
**
diplomacy**
incarceration (provides the service of keeping criminals out of society)
**
law enforcement (provides the service of identifying and apprehending criminals)
**
lawyers (who perform the services of
advocacy and decisionmaking in many dispute resolution and prevention processes)
**
mediation**
military (performs the service of protecting states in disputes with other states)
**
negotiation (not really a service unless someone is negotiating on behalf of another)
*
education (institutions offering the services of teaching and access to information)
**
library **
museum**
school*
entertainment (when provided live or within a highly specialized facility)
**
gambling**
movie theatres (providing the service of showing a
movie on a big screen)
**
performing arts productions**
sexual services (where legal)
**
sports**
television* fabric care
**
dry cleaning**
laundromat (offering the service of automated fabric cleaning)
*
financial services**
accounting**
banks and
building societies (offering lending services and safekeeping of money and valuables)
**
real estate**
stock brokerages
**
tax return preparation
*
foodservice industry
*
hairdressing*
health care (all health care professions provide services)
* information services
**
data processing**
database services
**
language interpretation**
language translation *
risk management **
insurance**
security* social services
**
social work*
transport *
utilities **
electric power**
natural gas**
telecommunications**
waste management**
water industry*
marketing*
product*
tertiary sector of industry*
services marketing*
experience economy*
customer service*
ecosystem services*
Vendor-independent solutions provider*
Software as a Service*
Application service provider*
On-demand*
Service economy*
list of electrical services*
list of marketing topics*
list of management topics*
list of economics topics*
list of finance topics*
list of human resource management topics*
list of accounting topics*
list of information technology management topics*
list of business law topics*
list of production topics*
list of business ethics, political economy, and philosophy of business topics*
list of business theorists*
list of economists*
list of corporate leaders*
list of companies
