The term ‘services’ refers to various economic activities that are not directly associated with agriculture, mining, or the manufacturing/production of goods. Services encompass the delivery of human value through the application of managerial skills, labour, entertainment, advice, training, intermediation, and more.
The terms ‘product’, ‘good,’ and ‘service’ are often used interchangeably due to confusion. A ‘product’ is anything offered by a manufacturer to meet the needs of customers or buyers. This includes any offering to the buyer, such as goods, services, places, experiences, people, properties, etc.
Distinctive Characteristics of Services
The four unique and essential characteristics that differentiate services from goods are mentioned below:
The first unique characteristic of services is their intangibility. It is impossible to touch, see, taste, smell, hear, or even feel services before buying. For example, a person may not experience the joy of living in a five-star hotel unless and until he stays there.
It is a distinctive characteristic of services, often referred to as ‘immediacy’ by professionals. There are two types of inseparability concerning services:
- The inseparability of the production of services from its consumption
- The inseparability of the service from the individual who possesses the skill and delivers the service.
The production and consumption of services are simultaneous processes because services are produced only in the presence of the consumer. This characteristic is not found in physical goods as they don’t require consumers for their production. These goods are produced, stored, and distributed through various channels when needed.
Services often exhibit the characteristic of heterogeneity or variability. Each service is unique and generated, offered, and consumed only once. It can never be replicated exactly as it was previously due to variations in conditions, locations, timings, and allocated resources.
Yet, customers often desire the same service that they have previously availed. Many services are considered heterogeneous, meaning they lack consistency. These services are typically tailored to each consumer and their specific circumstances.
The reasons for this are as follows:
- Services are inseparable from their provider, which leads to variability. This variability is inherent in the work and depends on the individual executing the services.
- Services heavily involve people, and anything involving people is inherently variable. The type of people providing the services often categorizes them into skilled services, unskilled services, and highly specialized services. However, the producer’s identity is irrelevant in the case of physical products.
- Services are influenced by the time and place of provision, and this effect also varies with the time and place dimension.
Services are perishable; they cannot be preserved. For instance, many hotels and guest houses charge their customers for missed bookings because the value of the service is only present at that specific point in time.
If the demand for the service is stable, perishability does not pose a problem. However, this is not the case when demand fluctuates. Take marriage lawns and banquet halls as examples. They possess significantly more equipment and facilities during the wedding season than they do during the rest of the year.
Other Characteristics of Services
There are some important characteristics of services apart from four unique characteristics. These are stated below:
The marketing of services can be performed in a slightly different manner due to its intangible nature. Unlike products, which are physically transferred from one location to another along with the transfer of ownership, services only provide access to the users without any change in ownership. This difference prevents the reselling of services by the buyer.
For example, a customer can utilize the services of a healthcare provider, a gym, a gaming centre, or a hotel, but the actual ownership remains with the service providers. It is not transferred.
There is no method for delivering services to customers or users. Distribution channels cannot be used for the transport of services. To reap the benefits of services, the presence of both service providers and users is essential. Therefore, it can be stated that services can only be offered to limited geographical locations.
4. Quality Measurement
Different types of parameters are utilized to evaluate the quality of services. Rating or quantifying the procurement of a service is challenging. For instance, when patronizing a restaurant, a customer can measure the quantity of food, but evaluating the overall experience requires considering factors such as waiter behaviour, premises atmosphere, and staff politeness.
Therefore, services can be rated based on customer satisfaction. The service provider collectively delivers elements such as atmosphere, conveniences, consistent quality, status, anxiety, and morale.
5. Nature of Demand
The various elements related to the nature and level of demand cannot be overlooked for services. The nature of services is variable in most instances, particularly during peak seasons, which results in an unexpected surge in demand.
For instance, during festivals or the wedding season, the burden on public transportation significantly escalates. In the summer, the majority of people prefer to travel to hill stations. The use of playgrounds mounts in winter. All these examples demonstrate the adaptability of services as per demand.
6. Participation of Customers
Generally, the customer needs to be present at the time of service production, as it is not possible to produce the service in their absence. However, goods do not have this limitation.
Indeed, the simultaneous presence of both the customer and the service provider is essential during service production. In the majority of instances, there is a face-to-face interaction between the customers and service providers during the service production process. Therefore, services can be characterised by the interaction between service providers and consumers.
Different individuals contribute to the creation and delivery of services. In fact, the proficiency of any service provider is largely contingent upon the expertise of these individuals. Service providers employ those who have competence in the field of service offered by the organisation.
The complete automation of services is not feasible, resulting in high employment. However, knowledge sharing and capturing can be facilitated to some extent with the aid of knowledge management systems.