What are services? Meaning and Characteristics

Table of Content:-

Meaning of Services

Service is the non-material equivalent of a good. A service provision is an economic activity that does not result in ownership but implies an exchange of value between seller and buyer in the marketplace, and this is what differentiates it from providing physical goods.

It is a process that benefits by facilitating a change in customers, their physical possessions, or their intangible assets.

Commonly, the term cannot only apply to personal services like hair cutting, auto repair, dental services, legal consultants, etc.

The marketing experts view this in a bit different way. The expert feels that the scope of services is much wider. There is no doubt in it that experts have attempted to define the services but no single definition has been accepted universally.

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Services are widely used by people in practically every facet of life. Whether it is education or entertainment hotels or fast-food chains, travel or telephone, advertisement or amusement parks, to name only a few, services are becoming more and more predominant. The globalised era is witnessing services being used by a wide cross-section of society, ranging from the corporate world to the common man. The significance of services has become increasingly prominent since the conclusion of World War II.

The large-scale destruction caused during World War II required a wide range of economic activities to put the economy of the war-torn countries back on the rail. The implementation of new projects has increased the demand for financial and various other services. In developed societies, service is one of the targeted growing sectors and is becoming more and more pronounced vis-a-vis agriculture. In developing countries too, service is becoming one of the major employers.

What are services

Definition of Services

According to Philip Kotler, “A service is an act or performance that one party can offer to another that is essentially intangible and does not result in the ownership of anything. Its production may or may not be tied to a physical product”.

As per Zeithaml and Bitner, “Services are deeds, processes and performances”. Here, deeds are the actions of the service provider, processes are the steps in the provision of service, and performance is the customers’ understanding of how the service has been delivered.

According to Christopher Lovelock, “Services are economic activities offered by one party to another, most commonly employing time-based performances to bring about desired results in recipients themselves or in jects or other assets for which purchasers have a responsibility”.

What are Services?

Simply services can be defined as a diverse group of economic activities which are not directly associated with the manufacture of goods, mining or agriculture. They typically involve the provision of human value added in the form of labour, advice, managerial skill, training, entertainment, intermediation, and the like. They differ from other types of economic activities in many ways.

Services are acts, deeds and performances performed by people or machines, sometimes involving both individuals and their possessions. The usage of terms like product, good, and service can often lead to confusion. Product is conceptualised as something a marketer offers customers to satisfy their needs. Product is bigger in scope as it includes anything offered as value to customers including goods, services, experiences, persons, places and properties. Implicit in an attempt to define services is a reference to goods as a marketing entity.

Hence, service definitions primarily focus on the distinguishing factors that set services apart from goods.

Services possess four unique inherent characteristics not found in goods, apart from these inherent characteristics, services also possess some other features.

Characteristics of Services

Services possess four unique inherent characteristics not found in goods, apart from these inherent characteristics, services also possess some other factors.

1) Intangibility

Services are intangible. Services, unlike products, do not allow individuals to experience them through touch, sight, taste, hearing, or smell before they acquire them. The person getting a facial cannot see the exact results before the purchase, and the patient in the psychiatrist’s office cannot know the exact outcome.

2) Inseparability

Inseparability is the following unique feature of services. Some experts refer to it by another term ‘immediacy’. Two kinds of inseparability characterize services.

  • i) Inseparability of production and consumption.
  • ii) Inseparability of the service from the person possessing the necessary skills and performing it is a fundamental aspect to consider.

Typically, service providers produce and consumers consume services simultaneously. This is not true of physical goods, which are manufactured, stored in inventory, distributed through various resellers and consumed later. If a person renders the service, then the provider is part of the service. Because the client is also present as the service is produced, service provider and client interaction is a special characteristic of service marketing. Both provider and client affect the results.

3) Variability/Heterogeneity

The variability, individuality, and heterogeneity characterize services. Each service is unique. It is one-time generated, rendered, and consumed and therefore, can never be exactly repeated. It can never be used again at the same location, time, conditions, circumstances, current configurations or assigned resources are different for the next delivery, even if the same service consumer requests the same service. Many services are considered heterogeneous or lack homogeneity because they are often customized for each consumer or tailored to specific situations.

This is so because of three reasons:

i) The inseparability of the service from the service provider leads to variability, the provider of the service sharing being inseparable from the service, variability automatically enters the picture, depending on the person performing the service.

ii) Services are highly people-intensive. Anything that is people-intensive is bound to be characterized by variability. Services are often categorized based on the type of people who provide them – like A service unskilled, skilled, and complete professional services. In the case of physical products, the fact that produces the product is immaterial.

iii) In services, the effect varies depending on when and where the service is provided.

As a combined result of the three factors, services are marked by a high degree of variability/individuality/ IBM Alm heterogeneity.

4) Perishability

Services cannot be stored. Some lawyers may charge patients for missed appointments as the value of the service was only present at that specific time. The perishability of the service is not an issue when there is a consistent demand. When demand fluctuates, service firms have problems. For example, Public transportation companies must possess a larger fleet of vehicles to cater to the high demand during rush hours compared to a scenario where the demand is evenly distributed throughout the day.

Nature of Services

Apart from the four unique nature of services, there are some other characteristics of services which are:

1) Ownership

It is also ownership that makes it significant to market the services in a slightly different manner. The goods sold are transferred from one place to another, as ownership is transferred it allows buyers the opportunity to resell them. In the case of services, people find different things. The users have access to the service. For example, a consumer can use personal care services or medicare services or can use a swimming pool or stay in a hotel room; however, the ownership rests with the providers.

2) Service as Performance

While companies produce products, they perform services. In most cases, the latter an unconnected to any physical product.

3) Simultaneity

Services cannot be delivered to customers or users. Services do not move through the channel of distribution. For availing the services, the users must be brought to the providers or the providers go to the users. It is right to say that the services are often limited to specific geographical areas.

4) Quality Measurement

The quality of service requires an additional tool for measurement. One cannot measure it solely based on service level. It is extremely challenging to rate or quantify the total purchase. For example, one can quantify the food served in a hotel but the way a waiter or the staff serves it or the overall environment, and the behaviour of the staff can’t be ignored while rating the total process. Hence he can determine the level of customer satisfaction at which they are found satisfied. A firm offers various elements such as ambience, conveniences, consistent quality, alleviation of anxiety, status enhancement of morale etc.

5) Nature of Demand

While going through the features of services, one cannot underestimate the factors related to the nature of demand. Generally, the services are found to fluctuate in nature. Particularly during the peak season, he finds an abnormal increase in demand. For example, the mobility of passengers is found to increase, especially during the marriage season or an important festival. Tourists prefer to go the tourist spots or resorts, especially during summer when they find the weather conditions suitable. Cricket stadiums are used in winter.

6) Customer Involvement

In most services, the consumer is a significant part of the production process, as he has to be physically present when the service is produced. This is not true of physical products. A service situation requires the presence of not merely the consumer but the producer as well. The service provider and consumer often meet face-to-face when the service is produced. Hence, service provider-consumer interaction becomes a unique feature of services.

7) Labour Intensity

Labour intensity is another characteristic of services. Labour is usually the most critical determinant of service organization effectiveness. A professional service firm recruits employees who possess specialized knowledge and skills in the service disciplines it offers. Labour plays a crucial role in service delivery, and automating it is not easy. However, the use of knowledge management systems allows for some degree of knowledge capture and sharing. While on the other hand, manufacturers can automate many of their production processes to reduce their labour requirements.

Dimensions of Services

A service universe that prompts service concepts that prompt service classes that engender service events is a real fact, but the formulation of a service universe is a major problem for any service organisation. This is the most common problem that would have been asked a long time ago by researchers and other organisations.

IBM Almaden Services Research and Fitzsimmons have identified five dimensions along which the services can be classified as:

1) Service Process: Using the degrees of Customer Interaction and Customisation (by the provider) and Provider Judgement or Labour Intensity as metrics.

2) Service Nature: Using the Service Object and Service Result as metrics.

3) Service Delivery: Evaluating service Scheduling and Service Mode (continuous or discrete) as metrics.

4) Service Availability: Using Service Site and Service Execution (who travels – provider or client) as metrics.

5) Service Demand: Using Demand Fluctuation and Service Capacity as metrics.

Service Model Generators

Service Organisations can use the five dimensions  as catalysts for developing service models.

1) Service Process

Each dimension can be conceptualised as a distinct perspective within a class of service models. Collectively, the six dimensions define the vast expanse of the service universe. It is helpful to perceive the service universe as a perspective on the wide range of services in a socially constructed world. The Service Process dimension is utilised as an introductory example.

Each dimension can be viewed as a matrix exemplified by the following illustration of the service process.

Each quadrant suggests a different service model, and the contents of that quadrant are examples of that particular service arrangement. This is a perfect start to defining classes of service, but there are a few open items, such as the specification of the service object upon which the service is executed. Accordingly, the service process is a necessary but insufficient condition for establishing a comprehensive service model.

The service metrics deserve some consideration. The Customer Interaction and Customisation metric refers to the degree of specific attention given by the service provider to the client throughout the entire service experience. When a client books an airline seat or a hotel room, they are presented with a limited number of options and only a basic level of service is provided to them thereafter. With hospital service or auto repair,  the level of service provided is tailored to meet the distinct needs of every individual client.

The Provider Judgement metric can refer to three possibilities:

  • i) The amount of time the client receives attention when in the service process;
  • ii) The amount of time the provider is giving service when in the service process, and
  • iii) The level of knowledge the provider brings to the service event.

The service metrics are not precise in all cases, but it is important to note that our ultimate objective is to  categorize service classes rather than provide detailed descriptions of individual service events.

2) Service Nature

To achieve a greater degree of specificity, the service process dimension  is supplemented with a service nature dimension as outlined below:

When considering the knowledge and services provided by a medical practitioner as an example, the service would be classified as follows:

  • i) Service Process: Provider Judgement or Labour Intensity (high) and Client Interaction and Customisation (high).
  • ii) Service Nature: Service Result (tangible), Service Object (people).

As before, the characterisations of a physician’s services to this point represent necessary conditions, but still no sufficient conditions. Therefore, additional dimensions are required for a complete classification.

When evaluating the nature of a service, specific service metrics should be taken into consideration. The Service Object metric refers to the object on which the service is performed, whether it is a person or an item owned by a service provider. It is important to note that if the service object pertains to information,  it would fall under the possession category. The Service Result metric can refer to two different potential possibilities:

  • i) In the case of a person object, it refers to whether the service affects a person’s physical presence, or it affects a person’s mind; and
  • ii) If the service object is a possession, it refers to whether the result is something one can usually observe.

3) Service Delivery

This dimension reflects the scheduling of services and the mode in which they are delivered, whether discrete or continuous.

The service delivery dimension encompasses two key aspects: the provider’s familiarity with the client and the scheduling of the service in advance (referred to as Service Scheduling), as well as the nature of the service itself, whether it has specific start and stop times or is provided continuously (known as Service Mode). Building upon the physician’s example, the nature of the service with three dimensions can be specified as follows:

  • i) Service Process: Provider Judgement or Labour Intensity (high), Client Interaction and Customisation (high).
  • ii) Service Nature: Service Result (tangible), Service Object (people).
  • iii) Service Delivery: Service Scheduling (formal), Service Mode (discrete).

While there may be exceptional cases within this analysis, the design is precise enough to clearly define a Service Universe.

4) Service Availability

The dimension of service availability specifies the Service Site location where a service event takes place and determines which entity in the service relationship is responsible for delivering the service (Service Execution). This dimension can be explained as follows:

This dimension gives evidence regarding the location and organization of a service.

Building upon the physician’s example, the nature of the service with four dimensions can be defined as follows:

  • i) Service Process: Client Interaction and Customisation (high) and Provider Judgement or Labour Intensity (high).
  • ii) Service Nature: Service Result (tangible), Service Object (people).
  • iii) Service Delivery: Service Scheduling (formal), Service Mode (discrete).
  • iv) Service Availability: Service Site (single site), Service Execution (client travels).

It is evident at this point that a service model for medical provisioning is starting to take shape.

5) Service Demand

It refers to the degree to which demand for service fluctuates and the capacity of the service provider to effectively meet the varying needs of clients.

The concept of service demand can be considered as a composite dimension because it reflects the degree of client demand and the capacity of the service provider to respond to demand changes. To a certain extent, demand fluctuation can always be predictable. For example, it is common for doctor appointments to increase after a holiday or weekend, as individuals have the chance to reflect on their ailments. However, the real question relates to peak demand and the flexibility of service provision. Some services can manage demand by scheduling and capacity management, achieved by employing part-time personnel.

When considering service demand, the example of a physician results in the following list:

  • i) Service Process: Client Interaction and Customisation (high) and Provider Judgement or Labour Intensity (high).
  • ii) Service Nature: Service Result (tangible), Service Object (people).
  • iii) Service Delivery: Service Scheduling (formal), Service Mode (discrete).
  • iv) Service Availability: Service Site (single site), Service Execution (client travels).
  • v) Service Demand: Demand Fluctuation (narrow), Service Capacity (not flexible).

The example of the physician is complete in the sense that a conceptual view of a medical provisioning service along the five dimensions has been created.

It is important to recognise that a service model is not normative in any sense of the word. For example, it does not tell whether to go to a physician or a chiropractor. It does not tell how to combine services or develop a service system. A service model defines one point in a five-dimensional Cartesian space representing, representing different categories or classes of services. What about service innovation? Simply go to a point in the space that is not represented and there is innovation. There is much more to service innovation, but this is the basic idea.

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