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Nature and Types of Services

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Services are those essential and separately identifiable intangible activities satisfying the wants of consumers. It is not necessary that services are linked to the sale of a commodity or another service. For example, banking services, warehousing services, etc. Services require personal interaction between the service provider and the consumer, which helps the service provider to make necessary changes in the service according to the nature and requirements of the consumer. Services do not include any manufacturing or production of goods, it only aims at fulfilling the needs and wants of a consumer. 

According to Kotler, Armstrong, Saunders, and Wong, “A service is an activity or benefit that one party can offer to another, which is essentially intangible and does not result in the ownership of anything. It production may or may not be tied to a physical product.”

Nature of Services

  • Intangibility: Services are intangible in nature. It means that the services provided to a consumer cannot be touched, seen, or felt, instead, they can be experienced only. As individuals cannot taste, feel, or touch a service, they cannot determine its quality before consumption; hence, it gives rise to the purchase. Therefore, it is essential for the service providers to continuously work on their services to provide desired results to the customers. For example, a doctor should provide a favourable experience to a patient.
  • Inconsistency: As there is no tangible product in the services, they are inconsistent in nature and have to be exclusively performed by the service provider every time. Besides, different customers have different expectations, wants and demands. Therefore, the service providers should alter their offer to meet the customers’ requirements as closely as possible. For example, beauty parlor services, etc.
  • Inseparability: The production and consumption of services are inseparable as they co-occur. For example, if we manufacture a television today, we can sell it at a later date. However, we cannot do the same with services, as they have to be consumed as and when they are produced. Even though the service providers can design a substitute for their services as per the requirements, customer interaction is an essential part of services.
  • Inventory: As discussed earlier, services do not mean any tangible component; therefore, we cannot store them for future use. In simple terms, services are perishable in nature, and one cannot store the service itself but can store some associated goods to the service for future use. For example, one can purchase an airplane ticket and store it, but can experience the journey only when the airlines provide it to the customer.
  • Involvement: A customer is involved in the production of the service. In simple terms, as the customer is the recipient of the service, their participation at the time of service delivery is a must. However, the service providers can make necessary changes in the services as per the need of the customer. For example, Urban Clap cannot provide massage service if the customer is not present or does not participate.

Types of Services

Business Services

The services used by business organizations to conduct activities are known as business services. The business services assist the business but do not deliver a tangible commodity. For example, transportation services do not give a tangible result, but transport goods, inventory, raw materials, etc., from one place to another. The major business services are insurance, banking, warehousing, transportation and communication services. 

Social Services

The services provided by an individual or a group of individuals voluntarily for the accomplishment of some social goals are known as social services. The social goals include improving the standard of living for the weaker section of society, providing educational and health facilities to poor children and people, or providing hygienic conditions in slum areas. The social service providers usually voluntarily provide the services along with some considerations to cover their costs. Therefore, these service providers do not have a profit earning motive. For example, educational facilities or services provided by NGOs to poor children.

Personal Services

The services that give different customers’ a different experience are known as personal services. These types of services are inconsistent in nature and differ based on the service provider, customers’ demands, preferences, etc. For example, restaurants, hotels, tourism, etc. 

Types of Business Services


Commercial banks play an essential role in an economy by providing their customers with institutional credit. These commercial banks transact the banking business, i.e., they accept money with the motive of lending and investing the deposited money by the public, repay them on demand, or provide them withdrawing facilities through cheques, drafts, orders, etc. The banks also earn some profit by lending money to the companies. In simple terms, banking services provide finance to businesses in any form, for different purposes, such as purchasing raw materials, building, machines, and their daily routine activities. Besides, the banks also provide the companies with locker, draft, debit card and credit card facilities. 


Insurance services involve facilitating the companies with insurance for their business. In simple terms, insurance companies sign an agreement with companies, charge a premium fee, and then transfer their risk to themselves. The signed insurance agreement contains a promise by the insurance company to pay the mentioned insured company a fixed amount either on the maturity of the fixed period or in case of an accident or mishap to the business. Different kinds of insurance are life insurance, marine insurance, fire insurance, health insurance, etc. 


Transportation refers to the transfer of people, goods, raw materials, etc., from one place to another. Companies mainly use transport services to transfer finished goods, raw materials, inventory, human resources, etc., from one place to another. Transportation plays a crucial role in the development of an organization as these are the only services that transport raw materials, essential products, and human resources from one place to another. Different modes of transportation supporting these services are rail, air, sea, road and waterways. 


Warehousing means storing goods, materials, etc., in a scientific and systematic manner. Usually, there is a time gap between the production and utilization of the goods; therefore, an organization needs to preserve the goods until they are utilized. Warehousing solves this problem of the companies by providing storage facilities to the companies. Today’s warehousing services provide the right quantity at the right time and place, in the right physical form, and at the right cost. Typically, warehousing services are used by importers, wholesalers, exporters, manufacturers, customs, transport businesses, etc. 


Communication is the process of creating a common understanding amongst people by exchange of messages through different sources. For the success of a business, it needs to establish a good relationship or link with the outside world, including customers, creditors, suppliers, competitors, etc., as it cannot run in isolation. Therefore, it is essential for companies to use fast, accurate and efficient communication services. Communication services can be used for placing an order, filing a complaint, providing suggestions, expressing ideas, sharing information, etc. The main communication services used by companies are telecom and postal. 

Last Updated : 06 Apr, 2023
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