Supplying a service involves fulfilling a commercially obligated duty, task or act.
With a service, the deliverable, or exchange of value, is an act (intangible), not a product (tangible).
It should be noted that although a service itself is intangible, it may involve the exchange of items, although it is not principally concerned with such items.
Service Examples
Insurance
For example, an insurance company is a financial services provider. The provision of an insurer to agree to pay out money to the policyholder to cover damages in the case of an untoward event.
The insurance policy is written, co-signed and a physical copy is handed to the policyholder.
So the service is sealed by paperwork.
However, it’s the service (act) and not the paperwork (item) that comprises the value.
Hotel
Now, let’s take a hotel as an example. A hotel is known as a service provider, not a manufacturer. Its main business is the supply of a task, not the production of goods.
That being said, a hotel is a physical building. A hotel customer will use the bedroom, the restaurant, eat breakfast, and drink coffee.
But aside from all these physical/tangible components of the service delivery, the job of a hotel is to supply comfortable accommodation to guests for a given duration of stay.
Features of a service
- Definition: the act that defines the value given
- Proximity: the place or channel by which the service is delivered
- Parties: people of the giving and receiving end of the service
- Timeliness: the duration or time of delivery of service
- Cost: price paid for receipt fo service