Service sector is the most growing
sector in most of the economies. It is one of the parameter for economic growth
with the manufacturing sector and agriculture, forestry and fishing. If we look
at the Compounded Annual Growth Rate (CAGR), the service sector is grown by
8.5% and the service sector is 57% of the total GDP.
Service sector is broadly classified
as
- Trade, Hotels, Transport, Storage and Communications
- Financing, Insurance, Real estate & Business services
- Community, Social & Personal Services
Thus, services play a major role in
development of any country. Research indicates that the growth and advancement
in service industry is an important indicator of progress of any country.
Service industry offers the best jobs, hires the most talented manpower and
provides the best income.
What are services?
According to Theodore Levitt,
“THERE ARE NO
SUCH THING AS SERVICE INDUSTRIES. THERE ARE ONLY INDUSTRIES WHOSE SERVICE
COMPONENTS ARE GREATER OR LESS THAN THOSE OF OTHER INDUSTRIES. EVERYBODY IS IN
SERVICE.”
Each and every product purchase involve
some kind of service. Some are more product oriented and some are more service
oriented. In practical sense, it is impossible to find a pure product or a pure
service. Services can be understood in following perspectives:
Service
as Industries and Companies
Indian Economy is classified into three
sectors:
- Industry - consists of Mining and Quarrying, Manufacturing, Electricity, Gas and Water Supply and Construction
- Agriculture, Forestry and Fishing
- Services - consists of Trade, Hotel, Transport and Communication, Financing, Insurance, Real Estate and Business Services and Community, Social and Personal Service
Services as a Product
Service companies have products as
offering. At times, non-service companies also offer service products. Software
companies offer software as products, a beauty parlour have different haircuts
and beauty treatments as products, travel agencies have different itineraries
as products. On-service companies like auto-dealers have Annual Maintenance
Contacts as service products.
Customer Service
Customer service is a part of the
product offering. Companies do not charge anything for these services. The
services that are offered in a shopping mall by the retailer are customer
service.
Derived Service
This perspective deals with the concept
of value derivation. Customers view service as a holistic concept embedded in
products. They value a product in terms of all the tangible and intangible
benefits they derive from the product.
Defining Services
According to Kotler, " A
service is any activity or benefit that one party can offer to another that is
essentially intangible and does not result in the ownership of anything. Its
production may or may not be tied to a physical product"
Also, Service are defined
as "economic activities offered by one party to another, most
commonly employ time-based performances to bring about desired results. In
exchange for their money, time, and effort, service customers expect to obtain
value from access to goods, labor, facilities, environments, professional
skills, networks, and systems; normally do not take ownership of any of
the physical elements involved.
Scope of Services
Services are often viewed as a
combination of goods and services. Many marketers' offerings is divided into core
product element and supplementary services. These services are designed to
increase the value of the physical product and is the key differentiating
element. Also, there are marketers who offer core service products rather than
marketing products through services.
The service goods Continuum divides
pure goods and pure services on the basis of tangibility. More tangible
products are known as goods and less tangible are known as services.
According to Lynn Shostack, "the greater the weight of intangible elements in a market entity, the greater will be the divergence from product marketing in priorities and approach". Marketing of goods tend to provide abstract evidences to support the product. Service marketers, on the other hand, should be focused on enhancing and differentiating "realities" through manipulation of tangible clues to create evidences.
Some businesses in which
tangible and intangible elements carry equal weight emphasize abstractions and
evidence in about equal proportions, for example, McDonald's. Shostack has
developed a scale known as Goods-service continuum.
Industries classified under services
Broadly, the following industries may
be called as service industries
Most of it can be understood as
"T" shaped or "I" shaped. "T" shaped service
industries are those where the core business requires deep understanding of
their own discipline such as business, engineering or computer sciences
(for example IBM) explained by the vertical part of "T". The
horizontal part explains their service orientation. The "I" shaped
industries are more dominated by the horizontal part i.e. service orientation.
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