The document discusses the central role of services in modern economies. It notes that economies have evolved from agrarian societies to industrial societies and now post-industrial or service societies. The percentage of service sector employment has increased significantly over time in many nations. The US and other countries now have over 70% of their workforce employed in the service industry. The document also outlines different stages of economic development from pre-industrial to industrial to post-industrial societies and discusses trends driving service sector growth.

1. Role of Services in an Economy Welcome to Service Management Professor James Fitzsimmons University of Texas at Austin

2. Learning Objectives Describe the central role of services in an economy. Discuss the evolution of an economy from an agrarian society to a service society. Describe the features of preindustrial, industrial, and postindustrial societies. Describe the features of the new service economy

3. Service Definitions Services are deeds, processes, and performances. Valarie Zeithaml & Mary Jo Bitner A service is a time-perishable, intangible experience performed for a customer acting in the role of a co-producer. James Fitzsimmons

4. Definition of Service Firms Service enterprises are organizations that facilitate the production and distribution of goods, support other firms in meeting their goals, and add value to our personal lives. James Fitzsimmons

5. Role of Services in an Economy

6. Percent Service Employment for Selected Nations Country 1980 1987 1993 2000 United States 67.1 71.0 74.3 74.2 Canada 67.2 70.8 74.8 74.1 Israel 63.3 66.0 68.0 73.9 Japan 54.5 58.8 59.9 72.7 France 56.9 63.6 66.4 70.8 Italy 48.7 57.7 60.2 62.8 Brazil 46.2 50.0 51.9 56.5 China 13.1 17.8 21.2 40.6

7. Trends in U.S. Employment by Sector

8. Stages of Economic Development Pre- Use of Standard dominant human Unit of of living Society Game activity labor social life measure Structure Technology Pre- Against Agriculture Raw Extended Sub- Routine Simple hand Industrial Nature Mining muscle household sistence Traditional tools power Authoritative Industrial Against Goods Machine Individual Quantity Bureaucratic Machines fabricated production tending of goods Hierarchical nature Post- Among Services Artistic Community Quality of Inter- Information industrial Persons Creative life in terms dependent Intellectual of health, Global education, recreation

9. The New Experience Economy

10. The Four Realms of an Experience

11. Experience Design Principles Theme the Experience (Forum shops) Harmonize Impressions with Positive Cues (O’Hare airport parking garage) Eliminate Negative Cues (Cinemark talking trash containers) Mix in Memorabilia (Hard Rock T-shirts) Engage all Five Senses (Mist in Rainforest)

12. Source of Service Sector Growth Innovation Push theory (e.g. Post-it) Pull theory (e.g. Cash Management) Services derived from products (Video Rental) Information driven services Difficulty of testing service prototypes Social Trends Aging of the population Two-income families Growth in number of single people Home as sanctuary

13. Discussion Topics Illustrate how the type of work he or she does influences a person’s lifestyle. For example, contrast a farmer, a factory worker, and a school teacher. Is it possible for an economy to be based entirely on services? What is the value of self-service in an economy?

14. Interactive Class Exercise The class breaks into small groups. Each group identifies service firms that should be listed in the top Fortune 100 and places them in rank order of estimated annual revenue. www.fortune.com/lists/F500/index.html