Business Services: 25 flashcards
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1. Define business services.
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Intangible activities that support business operations and facilitate trade and industry without transferring ownership of any good.
2. Name the five defining features of services.
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Intangibility, inseparability, inconsistency, perishability, and customer involvement.
3. What does intangibility mean?
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A service cannot be seen, tasted, or touched before it is purchased.
4. What does inseparability mean?
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Production and consumption of a service happen at the same time.
5. What is inconsistency in services?
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Service quality varies with who delivers it, when, and where.
6. What does perishability mean?
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A service cannot be stored for future sale — an unsold seat is lost forever.
7. What is customer involvement in a service?
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The buyer participates in shaping the service outcome.
8. What are tangibles in service marketing?
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Physical cues like uniforms, décor, certificates, and clean premises that signal service quality.
9. How do firms manage inconsistency?
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Through standardisation (scripts, checklists, training) and customisation (adapting to each customer).
10. How do firms manage perishability?
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Through dynamic pricing, advance booking discounts, and capacity planning.
11. Name the main types of business services.
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Banking, insurance, transport, warehousing, communication, and advertising.
12. How does a bank earn?
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By accepting deposits and lending funds, earning the difference as interest spread.
13. What principle does insurance work on?
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Pooling of risk — many pay small premiums so the few who suffer loss are compensated.
14. What utility does transport create?
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Place utility — moving goods from production points to consumption points.
15. What utility does warehousing create?
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Time utility — storing goods until demand arises.
16. What is a bonded warehouse?
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A warehouse where imported goods are stored before customs duty is paid.
17. What is cold storage used for?
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Preserving perishable goods like fruits, vegetables, and dairy until demand arises.
18. What do communication services move?
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Information — purchase orders, payment confirmations, customer queries.
19. What does advertising move?
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Demand — it informs potential buyers and builds brand recall.
20. What is the tertiary sector's share of India's GDP?
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More than half of India's GDP.
21. Why do service firms invest in branding and word of mouth?
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Because intangibility makes quality hard to judge before purchase, so reputation substitutes for inspection.
22. What is interest spread?
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The difference between the interest a bank pays on deposits and the interest it charges on loans.
23. Why is customer behaviour a quality factor in services?
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Because the customer participates in delivery, so their own conduct shapes the outcome.
24. Give an example of dynamic pricing in services.
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Cheaper airline tickets for off-peak travel to fill otherwise perishable capacity.
25. What is the core strategic choice between standardisation and customisation?
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How much to standardise for consistency versus how much to customise for individual customers.
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