Nature and Types of Services: Features of Services with Solved Examples

The compilation of these Business Services Notes makes students exam preparation simpler and organised.

Nature and Types of Services

We generally associate buying with goods. But in a market a customer also buys services. Everyone from your doctor to your plumber is selling you a service. Let us learn in detail about business services and their nature as well as types of services.

Nature of Services

The definition of service is “any intangible product, which is essentially a transaction and is transferred from the buyer to the seller in exchange for some consideration (or no consideration). Let us take a look at some of the characteristics of a service.

Intangibility: A service is not a physical product that you can touch or see. A service can be experienced by the buyer or the receiver. Also, you can not judge the quality of the service before consumption.

Inconsistency: There can be no perfect standardization of services. Even if the service provider remains the same, the quality of the service may differ from time to time.

Inseparability: One unique characteristic of services is that the service and the service provider cannot be separated. Unlike with goods/products the manufacturing and the consumption of services cannot be separated by storage.

Storage: The production and consumption of services are not inseparable because storage of services is not possible. Being an intangible transaction there can never be an inventory of services.

Nature of Services

Types of Services

Let us take a look at the kinds of services that we come across in the economy. There are basically three types of classification of services.

1. Business Services
The first type of service is business services. The most basic definition would be services that support the daily functioning and activity of any business but is not a commodity. Take for example IT services. In this day and age, every business will require a technological setup. The people who provide IT support to a business are providing a service in exchange for consideration.

There are other similar services that any business enterprise may require for the smooth functioning and management of its activities. Some such services are Banking, warehousing, insurance, communication, transport, etc.

2. Personal Services
Personal services are commercial activities that are provided to individuals according to their individualistic needs. The service here is extremely personalised to the customer. So there can be no uniformity in the services. The service provider will alter his service according to the personal needs of each customer.

Some examples of personal services are catering, hotel and accommodation, medicine, any kind of artistic endeavour (like painting, sculpting, etc). As you will notice all these services fulfill the personal needs of the customers.

3. Social Services
And when talking about types of services, we come to social services. These are essential public services. They are provided by the government or other such non-profit organisations. These services aim to achieve social equality in society by providing the backward sections with the help they need. The service is not provided for a profit motive but as a social cause. Social services include services in the sector of education, sanitation, medical facilities, housing, etc.


Participation of the actual customer is necessary for service. True or False?
This statement is True. When we talk about a service, it is an intangible exchange or transaction. Hence the involvement of both the service provider and the customer is necessary. Take for example the service provided by a doctor. If the patient (customer) is not present or involved, the service cannot be provided.