Different types of economic activities that are not directly involved in agriculture, mining, or manufacturing/production of goods, are called ‘services.’ With the help of using managerial skills, labor, entertainment, advice, training, intermediation, etc., services deliver human value.
They are different from other economic activities. In other words, the performance of certain types of acts or activities over individuals or their physical possessions with the help of people or machines or both are known as ‘service.’
The terms ‘product’, ‘good,’ and ‘service’ are often interchanged by individuals due to confusion. Product is anything that is being offered by the manufacturer to fulfill the needs of the customers/buyers. The product includes anything offered to the buyer like goods, services, places, experiences, persons, properties, etc.
Distinctive Characteristics of Services
The four unique and essential characteristics that differentiate services from goods are mentioned below:
1) Intangibility: 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.
2) Inseparability: It is the next distinctive characteristic of services, which is also referred to as ‘immediacy’ by some professionals. Inseparability regarding services is of two types:
- Inseparability of production of services with its consumption and
- Inseparability of the service from the individual who owns the ability and executes the service.
The production and consumption of services is a simultaneous process because services are produced only in the presence of the consumer. This characteristic is not exhibited by physical goods as they do not require consumers for their production. They are produced, stored, and distributed (on the time of requirement) through different channels.
3) Variability/Heterogeneity: Services also enjoy the characteristic of heterogeneity or variability. Each service is exclusive and one-time generated, offered, and consumed. It can never be exactly done in the same manner as the earlier one. This is because the conditions, locations, points in time, allocated resources, etc. vary for the upcoming delivery.
However, the customer desires the same service, which he has availed earlier. Numerous services are considered as heterogeneous, i.e., they lack consistency. The heterogeneous services are usually changed according to every consumer and the respective condition.
The reasons for this are as follows:
- The services cannot be separated from the provider, so it leads to unevenness. This unevenness automatically arrives in the work and depends on the person who is executing the services.
- Services greatly involve people, and anything which involves people is certainly variable. The type of people who provide the services often decides to categorize services like skilled services, unskilled services, and complete specialized services. But, in contrast, who is producing does not matter in the case of physical products.
- Services are affected by the time and the place where the service is being provided, and this effect also varies with the time and place dimension.
4) Perishability: Services are perishable, and they cannot be preserved. For example, some hotels and guest houses charge their customers for missed bookings because the service value occurred only at that point in time.
In case the demand for the service is stable, perishability does not pose any problem to it, in contrast to the situation when demand varies. For example, marriage lawns and banquet halls own much more equipment and facilities during the wedding season than 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:
1) Ownership: The marketing of services can be performed in a slightly different manner due to its ownership. The products are shifted from one location to another along with the transfer of ownership, which facilitates the reselling of goods by the buyer. This phenomenon is not present in the case of services. The service provides the only access to the users.
For example, a customer can utilize the services of a healthcare, gymnasium, play station, or hotel, but the actual ownership rests with the service providers, and it is not transferred.
2) Performance: Services are performed, unlike the goods which are manufactured. Sometimes, the services do not include the production or manufacturing of any physical product.
3) Simultaneity: There is no method by which services can be delivered to customers or users. Channels of distribution cannot be employed for the movement of services. To receive the benefits of services, it is necessary that both the service providers and service users are present together. Thus, it can be stated that services can be offered to limited geographical locations.
4) Quality Measurement: Different kinds of parameters are used for the evaluation of the quality of the services. Rating or quantifying the buying of service is very difficult. For example, while using the service of any restaurant, the customer can measure the quantity of food, but for evaluating the overall process, factors such as the behavior of waiters, atmosphere in the premise, and staff politeness are also necessary.
Therefore, the services can be rated based on the satisfaction of customers. Atmosphere, conveniences, consistent quality, status, anxiety, moral, etc., are collectively sold by any service provider.
5) Nature of Demand: The various elements related to the nature and level of demand cannot be avoided for the services. The nature of services is inconsistent in most of the instances, especially in the time of peak season, which results in an unprecedented increase in demand.
For example, during the time of some festivals or marriage season, the load on public transportation increases significantly. During the summer, most of the individuals prefer to go to hill stations. The use of playgrounds is increased in winter. All these examples reflect the flexibility of services as per demand.
6) Participation of Customers: Generally, the customer needs to be present at the time of production of the service, as it is not possible to produce it alone. However, goods do not have this limitation.
In fact, the presence of both, i.e., the customer and service provider, is necessary during service production. In most of the cases, there is a face to face interaction between the customers and service providers during the production of service. Therefore, the services can be characterized by the interaction of service providers and consumers.
7) People-oriented: Different people are involved in service creation and delivery. In fact, the effectiveness of any service provider largely depends on the skills of these people. The service providers appoint those employees who have expertise in the field of service being offered by the organization.
The automation of services is not possible. Thus, it employs a lot of people. However, some extent of knowledge sharing and capturing can be done with the help of knowledge management systems.