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Service Sector

Concept and Nature of Business Service

The term ‘service’ is used in different senses under different contexts. In the context of marketing, it is distinguished from goods or tangible products which can be seen and handled physically. The American Marketing Association has defined services as activities, benefits or satisfactions which are offered for sale of are provided in connection with the sale of goods. According to William Station, “Services are those separately identifiable, essential intangible activities which provide want satisfaction, and are not necessarily tied to the sale of a product or another service.”

In the context of business, we may define services as all those economic activities that are intangible and imply an interaction between the service provider and the consumer. Services may be both business and professional. Business services include banking, insurance transportation, warehousing, communication, etc. Whereas professional services include legal advice, medical advice, tax consultancy, etc.

Services are distinct from goods. Goods are physical products like pen, pencil, note book which could be delivered from the seller to the buyer. Thus, goods could be purchased and possessed. But services are essentially intangibles and their purchase does not result in possession of anything physical. For example, we seek medical advice from the doctor and don’t purchase the doctor.

There are tow basic differences between products and services. A product is identifiable and one can feel its presence in many ways. But a service cannot be identified. For example, a bus is a product but hiring it is a service. A bus can be identified but not its service. Secondly, in buying a product the buyer obtains an asset whereas in buying a service the buyer gets an experience liked treatment by a doctor.

The unique features of services are discussed below:

1.    Intangibility. Services are intangible in nature. They have no shape, size or other physical dimensions and so they can’t be touched. Services can’t be transferred physically from the buyer to the seller. When a person pays for a services, he gets the experience.

2.    Inreparability. The services can’t be separated from their providers or sellers. Thus, we can’t buy the provider of services like doctor or lawyer. The doctor and his medical advice are inseparable in the sense that the doctor must be present to provide medical advice to the client. The services may be provided at the place of the buyer or at the place of the seller or service provider. However, technology has own made it possible to replace the service provider this machines in many cases. For example. ATMs have replaced the bank clerk for providing the front office services like cash withdrawal and deposit of cheque for collection.

3.    Inconsistency or Heterogeneity. Services provided by humans are not uniform all the times. The performer of service might give different standard of service at different times. Similarly, a service my be rendered differently by different service providers.

4.    Perishability. Services can’t be stored for future sale or use. Services cannot produced before sale and stored for future demand. An employ seat in an aircraft, a spare berth in a train, an unsold seal in a cinema hall represent a service capacity which is lost forever. Thus a service not fully utilized represents a total loss.

5.    Involvement of Client. There is an involvement of the client or customer in the service delivery process. For example, it is the patient who gets medical treatment from the doctor or the bus passenger who enjoy the bus ride.

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