Classification of Services

Services can be classified on the basis of the following factors:

1) By Market Segment: As the needs and requirements of different markets are not homogenous, the services are different for different market segments.

The following types of services are there according to the types of the market served or ultimate customers:

  1. End Consumer Services: The services bought by the customers for self-consumption are termed as ‘end consumer services.’
    For example, hair cutting, beauty care, body massage, etc.
  2. Business Consumer Services: The various services bought by organizations are called ‘business consumer services’ or Business to Business (B2B) services. For example, consultancy, market survey, advertising, etc.

2) By Degree of Tangibility: The types of services are also influenced by the degree of tangibility. Depending upon the degree of tangibility, the services can be classified as follows:

  1. Highly Tangible: Services are termed ‘highly tangible’ when any tangible product offering is included in it. Sometimes, the lifespan of such products is limited.
    For example, a person can take a car on rent for a specified period. After completing this time period, the customer needs to return the vehicle to the service provider.
  2. Service Connected to Tangible Goods: Some kind of warranty is provided on the products by the business organizations. If a customer faces any difficulty with the products, free services are offered to the customer for a limited period of time. Such free services come under this category.
    For example, if a customer buys a cell phone, the manufacturer provides free service for a limited time.
  3. Highly Intangible: In these services, no physical product is offered to the customer. For example, in the Yoga center, the customer does not get any product apart from the Yoga exercises. The customers can feel the relaxing environment in the center, but no physical products are offered apart from this.

3) By Skills of Service Providers: The type of services is greatly influenced by the skills and abilities of service providers. The different types of services can be grouped into the following categories depending upon the skills and abilities required by the service provider to provide services to the customers:

  1. Professional Services: Formal training is essential for providing these kinds of services.
    For example, services offered by doctors, IT consultants, lawyers, etc.
  2. Non-Professional Services: No formal training is required to provide services to customers. Housekeeping and babysitting are the typical examples of these types of services, where there is no need of formal training for the service providers.

4) By Business Orientation: The nature of the business orientation of a service organization also determines the type of services offered by it. A service organization may be public or private, or it may be a non-profit or profit establishment.

Based on the objectives of conducting business, the services can be grouped into the following categories:

  1. Non-Profit Services: Serving society and not generating profit are the main objectives of such services.
    For example, services or charitable hospitals, government schools, etc.
  2. Commercial Services: Earning maximum profits and revenues are the main objectives of such services.
    For example, services offered by airlines, banks, insurance advisers, etc.

5) By Degree of Regulation: The level of regulations which are imposed by the government can be the other basis of the classification of various services. Depending on the degree of regulations, various services can be classified as below:

  1. Highly Regulated: A large variety of rules and regulations are formulated to regulate these services.
    For example, hospitals, insurance, mass transportation, etc.
  2. Limited Regulated: Some of the services have limited rules and restrictions. For example, fast foods, catering, etc.
  3. Non-Regulated: In some of the services, there are no regulations. For example, lawn care, house painting, computer time, etc.

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