Introduction: Definition, Characteristics and Classification of Services

Definition of Services

Services are acts or performances offered by one party to another. Unlike physical products, services are intangible, do not result in ownership, and create value and benefits at specific times and places. They aim to bring about a desired change for the recipient.

Characteristics of Services

• Perishability:
  • Services cannot be stored for later use. Once the service time passes, it cannot be recaptured or reused.
  • Example: An empty seat on a flight or an unbooked hotel room represents a lost opportunity to sell the service.
• Fluctuating Demand:
  • The demand for services often fluctuates due to seasonal changes, time of day, or special events.
  • Example: Increased demand for ice cream shops in summer or higher hotel occupancy during holidays.
• Intangibility:
  • Services cannot be seen, touched, or held before purchase and consumption.
  • Example: You cannot touch the experience of watching a movie or the advice given by a consultant.
• Inseparability:
  • Services are produced and consumed simultaneously. They often require the presence of the consumer.
  • Example: A haircut requires the presence of both the hairstylist and the customer.
• Heterogeneity:
  • Services are variable and can differ each time they are delivered, depending on who provides them and when and how they are provided.
  • Example: The quality of food and service at a restaurant can vary depending on the chef and waitstaff on duty.
• Pricing of Services:
  • The pricing of services is complex and influenced by factors like perishability, demand fluctuations, and the difficulty in standardizing service quality.
  • Example: Airline ticket prices vary based on demand, booking time, and availability.
• Service Quality:
  • Service quality is subjective and defined by reliability, responsiveness, empathy, and assurance. Customer satisfaction is paramount.
  • Example: The professionalism and empathy of healthcare providers significantly affect patient satisfaction.

Classification of Services

• Based on Tangibility:
• Services for People:
  • Services directly delivered to individuals to satisfy their personal needs.
  • Examples: Healthcare, restaurants, salons.
• Services for Goods:
• Services delivered to objects or goods to maintain or enhance their value.
• Examples: Transportation, repair and maintenance.

• Based on Intangibility:
• Services Directed at People’s Minds:
  • Services that influence or enhance human creativity, emotions, or intellect.
  • Examples: Education, entertainment, counseling.
• Services Directed at Intangible Assets:
• Services that manage or affect intangible assets like money, legal status, or insurance.
• Examples: Banking, legal services, insurance.

• General Classification:
  • Business Services:
    • Professional services that assist in business operations.
    • Examples: Consulting, legal, advertising.
  • Communication Services:
    • Services that facilitate information exchange.
    • Examples: Telecommunication, postal services.
  • Construction and Engineering Services:
    • Services related to building and infrastructure development.
    • Examples: Construction, civil engineering.
  • Distribution Services:
    • Services involved in the movement and storage of goods.
    • Examples: Logistics, warehousing.
  • Educational Services:
    • Services that provide knowledge and skill development.
    • Examples: Schools, training centers.
  • Environmental Services:
    • Services aimed at protecting and improving the environment.
    • Examples: Waste management, recycling.
  • Financial Services:
    • Services related to money management and investment.
    • Examples: Banking, insurance, investment.
  • Health-related and Social Services:
    • Services focused on improving health and social welfare.
    • Examples: Hospitals, social work.
  • Tourism and Travel-related Services:
    • Services that facilitate travel and tourism.
    • Examples: Travel agencies, hotels.
  • Recreational, Cultural, and Sporting Services:
    • Services that provide entertainment and leisure activities.
    • Examples: Sports facilities, cultural events.
  • Transport Services:
    • Services that facilitate the movement of people and goods.
    • Examples: Public transport, freight services.
  • Other Services:
    • Miscellaneous services that do not fall into the above categories.
    • Examples: Private household services, security services.

Services play a critical role in modern economies by providing essential benefits and facilitating other economic activities. They contribute significantly to the GDP and employment in many countries, and their quality and availability can impact overall quality of life.