Hosted Components and Services

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.

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 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 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 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 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.

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.

Service-Goods continuum

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), 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.

List of economic services

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

See also

• 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

Finding related topics

• 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