Service economic definitions and explanation

Service can be defined as the economic activity that does not consequence to the ownership of goods and is argue to be a procedure that generates benefits by facilitating a change in clients, a change in their physical belongings, or a change in their intangible properties.

It is been said from great economist that services providers make up the tertiary sector of the economy. Further explanation on service terms is described in this article, as well as what an individual must expect from services.


A service is defined as an intangible and insubstantial function. A service cannot be hold, touch, and handle in your hands, look at, taste, smell, or hear. Therefore, service providers do not have the need for storage, transport, or stocking of services. Consequently, is impossible for a service to be sold, resold or owned by someone, as well as it cannot be turned over from the service supplier to the service user and accordingly not returned from the service customer to the service provider. A service can only be delivered and commissioned by a service provider whose responsibility is to render and generate that particular service as a request from a particular authorised service customer group. 

Perish ability

Services are only consumable in two regards:

The service’s associated resources, processes and systems that are assigned for service delivery during a specific time phase. Therefore, if the chosen or programmed service customer does not have the need for the service during this specified period, then the service cannot be performed for his regard. From the service provider’s perception, this is a lost dealing as they can not charge for any service delivery. For example, a hairdresser’s customer cancels her appointment; the hairdresser can not charge any service delivery as the service did not apply to any customer.

When the service completes according to the customer needs or request, this particular service can not be assigned again under these conditions. For example, a passenger buys a bus ticket which specified time and date, this particular passenger travels that day to the destination, and he can not use or reuse that particular ticket for any reason to travel at that particular location at that time.


A service provider is vital for efficient service delivery, as the service provider must rapidly produce and deliver the service satisfactory to the requesting service customer. Even though the service delivery is performed automatically, the service supplier must firstly assign fundamental resources and systems, if needed, in order to be able to actively keep a suitable, satisfactory and efficient service delivery.


Services are delivered and consumed at the same time phase. At the time that the service customer has required the delivery of a particular service, that service must be produced from the beginning without any delay to the service customer.


Services are only able to be produced only one time at a particular time phase (as described before), rendered and consumed and a service can not be repeated at that particular phase, location and circumstances even if the service customer requires the exact same service. Therefore, each service can be described as unique. Most services can be seen as heterogeneous and are typically modified according to customer needs or each new situation.

A service needs a good marketing and requires a good promotion for the creative visualization to effectively create an actual image in the service customer’s mind. From the service customer’s perception, services characteristics make it tricky and complicated for a customer to be able to evaluate and compare services before to experience the particular service delivery provided by a particular service supplier or source.

Concluding, the key success in service economies is not other than the human factor. Services demands by customers can be vary depending upon some key factors such as the season, their business cycle or individual need, the time of day, the location, etc. During the service delivery, usually there is customer participation, as generally service conditions have a need of a high degree of communication between the service customer and service contributor.  Service providers aiming for long term business relationships and therefore they usually have a customer based relationships. 

Financial advisers, business consultancy, accountants, lawyers, doctors and many other public services are maintain a long term business relationships with their clients for many years.