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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.
Key attributes
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 they are difficult to conceptualize, services marketing requires creative visualizations to effectively make the intangible more concrete. From the
customer's point of view, this 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.
- Lack of transportability - Services must be consumed at the point of "production".
- 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 precicely 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 is very difficult to estimate demand.
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.
Service Delivery
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.
The 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) and also provides a service.
In a narrower sense, service refers to quality] of servicing: the measured appropriateness of assistance and
support provided to a customer. (This usage occurs frequently in retailing.)
Examples of economic services
See Also
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