Classification of Services

Services can be classified on the basis of the following factors:

1. By Market Segment

As the needs and requirements of different markets are not homogeneous, the services vary for different market segments.

Here are the following types of services according to the types of markets served or ultimate customers:

• End Consumer Services: These are the services purchased by customers for personal consumption. Examples include haircutting, beauty care, body massage, etc.
• Business Consumer Services: The various services purchased by organizations are known as ‘business consumer services’ or Business to Business (B2B) services. Examples include consultancy, market surveys, advertising, etc.

2. By Degree of Tangibility

The types of services are significantly influenced by the degree of tangibility. Depending on the degree of tangibility, services can be classified as follows:

1. Highly Tangible Services: These services are termed ‘highly tangible’ when they include any tangible product offering. Often, the lifecycle of such products is limited. For instance, a person can rent a car for a specified period. Upon completion of this duration, the customer is obliged to return the vehicle to the service provider.
2. Services Connected to Tangible Goods: Business organisations often provide a warranty on their products. If a customer encounters any issues with the products, complimentary services are offered for a limited period of time. Such free services fall under this category. For example, if a customer purchases a cell phone, the manufacturer furnishes free service for a certain period.
3. Highly Intangible Services: These services do not offer any physical product to the customer. For instance, in a Yoga centre, apart from Yoga exercises, the customer does not receive any tangible products. The customers can experience the calming environment in the centre, but no physical products are offered beyond this.

3. By Skills of Service Providers

The type of services is greatly influenced by the skills and abilities of service providers. The different types of services can be grouped into the following categories, depending on the skills and abilities required by the service provider to assist customers:

1. Professional Services: These services necessitate formal training. Examples include services offered by doctors, IT consultants, lawyers, and so on.
2. Non-Professional Services: These services do not require any formal training. Typical examples of these types of services are housekeeping and babysitting, where there is no need for formal education or training for the service providers.

4. By Business Orientation

The nature of a service organization’s business orientation also dictates the type of services it offers. Such an organization may be public or private, non-profit or profit-based.

Depending on their business objectives, these services can be classified into the following categories:

1. Non-Profit Services: The primary objectives of these services are to serve society without the focus on generating profit. Examples include charitable hospitals, government schools, and so on.
2. Commercial Services: These services have the main objective of maximising profits and revenues. Examples include services offered by airlines, banks, insurance advisors, and so forth.

5. By Degree of Regulation

The level of regulations imposed by the government can serve as another basis for classifying various services. Depending on the degree of regulation, services can be classified as follows:

1. Highly Regulated: These services are subject to a multitude of rules and regulations. Examples include hospitals, insurance, and mass transportation.
2. Limitedly Regulated: Some services face fewer rules and restrictions. Fast food establishments and catering services are examples of this category.
3. Non-Regulated: Certain services operate without any regulatory oversight, such as lawn care, house painting, and computer time.