Fundamentals of Business

Services and Marketing

Services are intangible goods, which can be sold despite not being actual objects. Consumers pay for a service as they would for manufactured goods. Already more people are employed in the developed economies in the provision of services than in the manufacture of products, and the service sector shows every indication of expanding even further.

Services familiar to most consumers are in the fields of maintenance and repair, transport, travel, entertainment, education, and medical care. Business oriented services include computer applications, management consulting, banking, accounting and legal services, stockbrokerage, and advertising.

Services, like products, require marketing. Usually, service marketing parallels product marketing with the exception of physical handling. Services must be planned and developed carefully to meet consumer demand. For example, in the field of temporary personnel, a service that continues to increase in monetary value, studies are made to determine the types of employee skills needed in various geographical locations and fields of business.

Because intangibles are more difficult to sell than physical products, promotional campaigns for services can be even more aggressive than those for manufactured goods. Through extensive promotion, temporary personnel agencies have convinced many companies that hiring on a temporary basis only in times of need is more economical than hiring permanent, full time personnel.

A Service Level Agreement is that part of a service contract where the level of service is formally defined. It is a contract that exists between customers and their service provider provider, client or between service providers. It records the common understanding about services, priorities, responsibilities, guarantee, and collectively, the level of service. For example, it may specify the levels of availability, serviceability, performance, operation, or other attributes of the service like billing and even penalties in the case of violation of the SLA.

Outsourcing

Is simply contracting a third party to service the customer. It's an intermediary between an enterprise and its customers. The activities outsourced are normally the non core ones. You can outsource any activity that is non core.

For example

Starting in the 1990s several companies choose to outsource their supply chain management by partnering with a 3PL, Third party logistics provider.