Service

From Simple English Wikipedia, the free encyclopedia

In economics and marketing, a service is a good that is non-material. Service provision means to help a customer himself (e.g. haircut) or mending an (physical) object of his possessions (e.g. repair of motor car) or change his assets (e.g. manage his stocks).

[edit] Key attributes

Services can be described in terms of their main attributes.

• Intangibility (cannot be touched) - They cannot be seen, handled, smelled, etc. There is no need for storage.

Because services are difficult to explain in advance, it is necessary to create a concrete image in the customer's mind to sell them. From the customer's point of view, this attribute makes it difficult to understand the value of services before the experience the service.

• Perishability (If you don't use it, it's lost.) - If you cannot sell your service your time is "lost". 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 (cannot be transported) - Services tend to be consumed at the point of "production" (although this doesn't apply to outsourced business services).
• Lack of homogeneity (Each time it's different.) - Services are typically modified for each client or each new situation. Mass production of services is very difficult. This can be seen as a problem of quality (it's not always the same).
• Labour intensity (Most of it is work.) - Services usually mean human activity. Therfore the human factor is often the key success factor in service industries. It is difficult to gain a dominant market share.
• Demand fluctuations (It's asked for only when it's actually needed. That can change very quickly.) - It can be difficult to forecast demand (which is also true of many goods). Demand can vary by season, time of day, etc.
• Buyer involvement (You cannot produce without contact with the consumer.) - Most service provision requires a high degree of interaction between client and service provider.
• Client-Based Relationships (When the customer is happy once he won't change the provider even if there is a cheaper one.) - Is based on creating long-term business relationships. Accountants, attorneys, and financial advisers maintain long-term relationships with their clientes for decades. These repeat consumers refer friends and family helping to create a client-based relationship.