Services: Definition, Examples, Characteristics, How to Measure

What’s it: A service is an intangible product representing any action or activity to provide a solution to another party without involving the transfer of physical goods from the provider to the customer. We can only feel the benefits without being able to see, touch or save for our future use. Examples are transportation, consultation, haircut, car washes, education, and health care services.

Businesses provide services to meet our needs and wants and to make a profit. When they do deliver, it could involve the following factors:

• Service providers such as workers or staff who interact with customers.
• Equipment used to provide services such as software, vehicles, computers, and office equipment.
• Physical facilities such as shops, office buildings, or other places where services are rendered.

What is the difference between services and goods?

In classification, services are one of two product categories. Others are goods, which represent tangible products.

We can see or touch a good. We can also move it from one location to another. In addition, we can also store it for some time and then reuse it. And, finally, we can judge it by its physical appearance.

Such characteristics do not apply to services. Because it is intangible, it is difficult to objectively assess how well the service is provided. We can only feel the benefits.

Even though services are invisible, the physical elements are vital in influencing our judgment as consumers. 

Now, let’s take a taxi service as an example. When we use taxi services, we can only feel the benefits – we get to where we need to go.

We may think the vehicle we are riding is a service in itself. But, it really isn’t. Delivering us is service. Taxi vehicles are not a service in themselves. It’s just a tool to deliver service.

Then, when we use the service, we will often encounter several aspects. In the above case, there are at least three:

1. The driver who interacts with us.
2. The vehicle we ride.
3. The facilities or conditions in the taxi vehicle, such as cleanliness.

These physical elements are strategic in providing services because they affect our satisfaction. For example, we like friendly taxi drivers. Since we’re satisfied, we’ll probably assume another taxi from the same company is of the same quality as the one we just took.

What are some examples of services?

Like goods, businesses offer services to individual consumers or other businesses. 

Then, some services require one-to-one interaction. Others can be done in mass. We call them personal services and commercial services.

• Personal services – one-to-one services such as hairdressing, training, consulting, and attorneys. Usually, they need simple support equipment such as razors or paperwork.
• Commercial services – performed on a large scale, such as insurance, banking, and transportation services. They usually require more sophisticated equipment such as software or electronic devices.

There are various services around us. Examples are as follows:

• Trading services: retail, wholesale, and distribution.
• Financial services: insurance, banking, pension funds, and investment management.
• Professional services: accountants, architects, lawyers, business consultants, and doctors.
• Consumer services: catering, house cleaning, haircuts, and car repairs.
• Personal care services: beauty care, salon, and dental care.
• Communication services: telecommunication towers, wireless networks, broadband, radio, television, and the internet.
• Transportation services: taxis, trains, and flights.
• Recreational and entertainment services: tourist attractions, museums, flower gardens, entertainment venues, and zoos.

What are the characteristics of the service?

Services have four key characteristics, which at the same time distinguish them from goods. They are:

1. Intangibility
2. Inseparability
3. Heterogeneity
4. Perishability

Intangibility

Services have no physical substance. We can not touch, see or taste them as we can do on the goods.

We can only feel the benefits of service when it is rendered. For example, we feel the benefits of banking services when using smartphones to make transactions or interacting with bank staff at branch offices.

Although we can feel the benefits. We find it difficult to judge its benefits using any real evidence.

Inseparability

Services are consumed and produced at the same time. In other words, the business provides it when we use the service. Accordingly, we have to be involved during the production to get the benefits.

It’s different from goods. We can keep them. And then we use them again a few days later, even after a few years.

Because it can be stored, we can consume goods after the business has produced some time before. In fact, we can buy them after three years as durable goods like cars and furniture do.

Heterogeneity

Services are unique and always different each time they are provided. Thus, they are less standard and uniform than goods. As a result, businesses find it is hard to ensure their consistency.

Satisfaction with services is always changing, depending on when, where, and by whom it is delivered. As a result, we can have different experiences for the same service at different times, even when dealing with the same staff or tools. Because the customer experience is unique, businesses must ensure the best for each service they provide.

Perishability

We can not save, put in storage, transport, or resell the services. Therefore, we cannot use the same services in the future. We also cannot transfer them.

We receive benefits when we use them and interact with providers or assistive devices. But, once delivered, it’s completely gone.

For example, we receive health consulting services when discussing with consultants. But, when we use the same service a few hours later, it can provide a different kind of satisfaction. For example, what the consultant says will not be exactly the same as before.

How to measure service quality?

A holistic framework for measuring service quality is SERVQUAL. It was first developed by A. Parasuraman, Valarie Zeithaml, and Leonard L. Berry.

SERVQUAL is a multi-dimensional tool designed to capture consumer expectations and perceptions about service quality along five dimensions. For further explanation, let’s take hotel services as an example.

• Reliability – the extent to which the provider delivers services accurately and reliably to customers, as promised. For example, the hotel room facilities are the same exactly as advertised, as are the landscapes and the food served in the restaurant.
• Assurance – knowledge, courtesy, and also the ability of staff to create trust in customers. For example, staff has knowledge about hotel facilities and the city in which they work. So, when guests ask some basic questions, they answer them easily, convincingly, and politely.
• Tangibles – physical elements such as equipment, space, and communication materials to facilitate service delivery. For example, this dimension could include hotel building, bedroom layout, cleanliness, surroundings, and staff appearance.
• Empathy – genuine attention given to the customer in an effort to understand what the customer wants. For example, when a guest complains, the hotel staff carefully listens and tries to solve. It not only requires them to be good listeners but also to show appropriate facial expressions, physical demeanor, and body language.
• Responsiveness – the ability to help and provide fast and accurate service to customers. For example, when a guest orders a meal, the staff delivers it on time. Or, when we first arrived, the staff was ready to help with the things we brought.