Business services are intangible goods that enable businesses to conduct their activities. These include banking, warehousing, transportation and communication services. These help in the effective functioning of business enterprises and make them more efficient.
Business Services and Their Characteristics
These are essential and separately identifiable intangible activities that fulfill the needs and wants of consumers. For example, insurance services help in the reduction of financial liabilities while transport and warehousing companies are responsible for the transportation of raw materials, finished goods and other essential things from one place to another.
Despite their intangible nature, these services provide a lot of value to customers and thus have become a major source of revenue for most companies. For this reason, they are often a key consideration when deciding where to invest in a company.
They are also a very attractive career path that gives you the flexibility to work anywhere you want. For instance, if you prefer working from home, you can start your own service company and deliver your services to clients at their homes.
Some examples of these kinds of business services are IT support, which allows firms to efficiently troubleshoot computer issues and resolve them promptly. Tech support workers are typically available to help customers with software, hardware and networking problems.
Other kinds of business services are employee-related, such as child care. Some organizations hire caregivers to host in-office day cares so that their employees can maintain a healthy work-life balance. Other services, such as real estate agents, help firms find workspaces or negotiate rental agreements.
The four elements of a great service model
As with any kind of business, the success of business services depends on the ability of managers to create a system of service delivery that is responsive to customer expectations. A good service business can achieve this through a combination of strategy, product, and people management.
A key part of this approach is to recognize that business services are fundamentally different from products and require a new set of tools for managing their performance. Managers of service companies must think about a set of distinctively different issues, including the role of customers, that are not addressed by many traditional techniques.
Rather than focusing on developing a product that will become a brand name, service companies focus on establishing a reputation for delivering a particular type of service. This helps to differentiate their business from competitors.
They may also have to develop economies of scale. A service that has a high cost to produce, such as car rental, may need to have a large number of locations.
These companies also have to develop a marketing strategy that focuses on the quality of their service and not on price. For example, a rental car company might have to advertise its premium service to differentiate it from cheaper alternatives.
This is because customers have a tendency to compare the price of different services against each other and to choose those that they feel will best meet their needs. This can lead to competition, which can be a serious obstacle for some service businesses.