In economics, a service is an intangible commodity. That is, services are an example of intangible economic goods.
Service provision is often an economic activity where the buyer does not generally, except by exclusive contract, obtain exclusive ownership of the thing purchased. The benefits of such a service, if priced, are held to be self-evident in the buyer's willingness to pay for it. Public services are those, that society (nation state, fiscal union, regional) as a whole pays for, through taxes and other means.
By composing and orchestrating the appropriate level of resources, skill, ingenuity, and experience for effecting specific benefits for service consumers, service providers participate in an economy without the restrictions of carrying inventory (stock) or the need to concern themselves with bulky raw materials. On the other hand, their investment in expertise does require consistent service marketing and upgrading in the face of competition.
Characteristic
Services can be paraphrased in terms of their key characteristics, sometimes called the "Five I's of Services".
1. Intangibility
Services are intangible and insubstantial: they cannot be touched, gripped, handled, looked at, smelled, tasted. Thus, there is neither potential nor need for transport, storage or stocking of services. Furthermore, a service can be (re)sold or owned by somebody,but it cannot be turned over from the service provider to the service consumer. Solely, the service delivery can be commissioned to a service provider who must generate and render the service at the distinct request of an authorized service consumer.
2. Inventory (Perishability)
Services have little or no tangible components and therefore cannot be stored for a future use. Services are produced and consumed during the same period of time.
Services are perishable in two regards
- The service relevant resources, processes and systems are assigned for service delivery during a definite period in time. If the designated or scheduled service consumer does not request and consume the service during this period, the service cannot be performed for him. From the perspective of the service provider, this is a lost business opportunity as he cannot charge any service delivery; potentially, he can assign the resources, processes and systems to another service consumer who requests a service. Examples: The hair dresser serves another client when the scheduled starting time or time slot is over. An empty seat on a plane never can be utilized and charged after departure.
- When the service has been completely rendered to the requesting service consumer, this particular service irreversibly vanishes as it has been consumed by the service consumer. Example: the passenger has been transported to the destination and cannot be transported again to this location at this point in time.
3. Inseparability
The service provider is indispensable for service delivery as he must promptly generate and render the service to the requesting service consumer. In many cases the service delivery is executed automatically but the service provider must preparatorily assign resources and systems and actively keep up appropriate service delivery readiness and capabilities. Additionally, the service consumer is inseparable from service delivery because he is involved in it from requesting it up to consuming the rendered benefits. Examples: The service consumer must sit in the hair dresser's shop & chair or in the plane & seat; correspondingly, the hair dresser or the pilot must be in the same shop or plane, respectively, for delivering the service.
4. Inconsistency (Variability)
Each service is unique. It is one-time generated, rendered and consumed and can never be exactly repeated as the point in time, location, circumstances, conditions, current configurations and/or assigned resources are different for the next delivery, even if the same service consumer requests the same service. Many services are regarded as heterogeneous or lacking homogeneity and are typically modified for each service consumer or each new situation (consumerised). Example: The taxi service which transports the service consumer from his home to the opera is different from the taxi service which transports the same service consumer from the opera to his home – another point in time, the other direction, maybe another route, probably another taxi driver and cab.
5. Involvement
One of the most important Characteristic of services is the participation of the customer in the service delivery process. A customer has the opportunity to get the services modified according to specific requirement.
Each of these characteristics is retractable per se and their inevitable coincidence complicates the consistent service conception and make service delivery a challenge in each and every case. Proper service marketing requires creative visualization to effectively evoke a concrete image in the service consumer's mind. From the service consumer's point of view, these characteristics make it difficult, or even impossible, to evaluate or compare services prior to experiencing the service delivery.
Mass generation and delivery of services is very difficult. This can be seen as a problem of inconsistent service quality. Both inputs and outputs to the processes involved providing services are highly variable, as are the relationships between these processes, making it difficult to maintain consistent service quality. For many services there is labor intensity as services usually involve considerable human activity, rather than a precisely determined process; exceptions include utilities. Human resource management is important. The human factor is often the key success factor in service economies. It is difficult to achieve economies of scale or gain dominant market share. There are demand fluctuations and it can be difficult to forecast demand. Demand can vary byseason, time of day, business cycle, etc. There is consumer involvement as most service provision requires a high degree of interaction between service consumer and service provider. There is a customer-based relationship based on creating long-term business relationships. Accountants, attorneys, and financial advisers maintain long-term relationships with their clientes for decades. These repeat consumers refer friends and family, helping to create a client-based relationship.
Small businesses often complain that today's market is so crowded with competition that it is nearly impossible to stand out. There are thousands of players in the same game at the same time. There are big companies with big budgets. Does this mean small firms can do nothing to stand out, particularly because they are restrained by lack of funds? I think what makes the biggest difference is making customers feel appreciated. When it is done effectively, a business can outshine in the market even without any new-to-the-world products, lavish advertising campaigns, or expensive freebie gimmicks.
Everybody talks about good customer service, but few seem to follow through on it. Most customers will tell you how they are not really happy with how they are treated by most businesses. Good customer service is still rare as most of our businesses hardly pay any attention to go the extra mile to exceed customer expectations. They don't emphasize enough on customer service and fail to understand that customer loyalty is all about customer engagement, customer service and positive experiences.
Small businesses should never let this opportunity slip away. Placing stress on customer service and customer relationship does not cost a small business much but neglecting them results in missing a potential opportunity to enhance competitiveness and lift its brand image without bothering much about costs. In addition, I would like to suggest to every small business to put the 'wow' factor in their customer service as icing on the cake — there is no dearth of stories in business literature to show how effective this strategy is for changing a business for the better.
Though there's a clear opportunity in good customer service, it has to be done the right way. The effort must not be show off. Exhibiting a high degree of fairness and integrity while dealing with your customers can do magic in portraying your business as unique. In addition, consistency must be maintained. You must involve every person and every aspect of your business in your customer service program and train up a competent customer service staff. You must know your customers thoroughly, collect customer feedback and work on them.
The same rule applies in putting the 'wow' factor in your customer service — it must be genuine. Along with that there must be an element of surprise. Experts suggest a number of ways to achieve this — offering personalized products and services, writing hand-written thank you notes to clients, celebrating their birthdays, and so on. Identify every such opportunity and make the best of them. This may sound trifling but sweating the small stuff usually goes a long way — a pleasant surprise with a 'wow' factor can turn your existing customers loyal patrons for life and create evangelists for your brand. So, give it a thought.
Regards- M Z HAQUE
source-http://en.wikipedia.org/wiki/Service_(economics)
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