Service Company Definition

Written by james withers
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Service Company Definition
Whether dealing with tangible or intangible products, service companies cater to needs. (Image by, courtesy of Glion Institute of Higher Education)

As consumers, we encounter service companies every day. Whether we are using cell phones purchased from telephone companies or utilising the public utility of electricity while watching television, we are targeted as consumers by service companies. Though such companies may sell services that are intangible, they often aim to attract customers by providing convenient and customisable service options.

Providing Convenience

Service companies provide clients with options that are designed to satisfy recurring business needs. As such, service companies are people-oriented organisations. In order to be competitive, service companies need to find ways to "put people back into the equation, not just automate and reengineer to increase operational efficiency." By providing convenience to consumers, service companies favour the quality of consumer experience as much as the quantity of their sales to consumers.

Company Status

In order to be considered a service company, a business enterprise must of course be a legitimate company. Although an enterprising individual may engage in service-oriented sales outside of a company setting, he should not be considered as a service company even if he presents himself as such to his clients. Similarly, non-profit entities such as churches or certain charity organisations rarely operate as service companies. Though these organisations provide services that are desirable to members of the community, they may not operate as companies.


Because service companies seek to capitalise on the evolving needs of consumers, many types of service companies exist. Restaurants, banking institutions, telephone companies and even public utility companies qualify as service companies. New service companies are constantly emerging based on changing trends that affect both public and private sectors of the global economy.

Factor of Intangibility

Unlike product-centred companies, service companies typically provide consumers with intangible goods and services as opposed to products. For example, public utility companies provide consumers with electricity, natural gas and waste management. Most consumers of these services never observe electricity flowing through wires within the walls of their households, directly inhale the natural gas they pay for or see waste from their households undergoing stages of purification at a local waste processing plant. However, such intangible services are so vital to the healthy operation of communities that members of such communities are willing to pay a considerable amount of money to ensure such service companies function properly.

Customisation Potential

Service companies often seek to develop symbiotic relationships with their clients, allowing such clients to outsource workloads or to streamline operations. As a result, clients are able to customise services, based on scalable payment options. Telephone companies, for example, are notorious for providing consumers the ability to customise their calling plans. Consumers pay extra for a wide array of features, such as call waiting, Internet connectivity or unlimited calling.

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