Business services are a broad category of business activities that do not involve the production or distribution of physical products. These services benefit companies through marketing, production, safety, cost and convenience.
Service-oriented businesses tend to have a more difficult time explaining what they do to customers and prospective customers than product-oriented businesses. This is because, unlike products, services do not have a physical reality that can be readily explained or identified.
Despite their intangibility, the four elements of service design are as essential to successful service-business management as they are to product-oriented business management. In order for a service business to be successful, it must address each of the elements and their interconnections, and it must understand its service value proposition in terms of what customers will pay to receive a high-quality experience.
In addition, a service business must overcome some of the barriers that have been traditionally used to prevent product-oriented companies from entering the service market. These barriers include a lack of brand name identification and a reputation for quality, which are both more difficult for service-oriented businesses to achieve than for product companies.
The challenges of service-business management are also exacerbated by the fact that most people have a product-oriented mental image of how business works. This product-oriented image limits communication in a way that inhibits the development of really innovative approaches to managing service-based businesses. A new framework is needed to help managers better define and design service-based businesses.