10 Service Industries

Question 1

What are the 5 characteristics of a service which makes it difficult from a physical product?

Answer 1

1. Simultaneity - production and consumption happen at the same time
2. Heterogeneity - service differs slightly each time
3. Intangibility - service is not a physical product
4. Perishability - service cannot be stored up or purchased in bulk

Question 2

What are the most common unit cost measures?

Answer 2

a) Time - for professional services
b) Passenger miles or tonne/kilometres - for transport services
c) Bed days - for private hospitals and hotels

Combined measures e.g. tonne/kilometre = COMPOSITE COST UNITS