The document discusses the history and growth of the service sector. It notes that the service sector has grown to account for over half of GDP in recent years and now dominates in terms of jobs, incomes, and talent. The document outlines several reasons for the growth of the service sector, including demographic, economic, political/legal, social, and technological factors. It also discusses different types of services, characteristics unique to services, challenges in service marketing/delivery, and approaches to managing different types of service organizations.

1. •History of Service Sectors
•Service Economy
•Difference between Product and Services
•Reason for the growth of service sectors
•Service component
•Zone of Tolerance
•Need of Services
•Obstacles and challenges in service marketing
Dr.D.Shoba MBA, M.Phil, Ph.D
Dr.D.Shoba MBA, M.Phil, NET, Ph.D
Assistant Professor, Guru Nanak college, Chennai

2. History of Service sector
I Industrial
Revolution
• Financial structure
• Transportation and Communication
II Industrial
Revolution
• Income in travel, Entertainment and leisure,
Communication
• Banking, Insurance, Investment and legal services
Developed
Economy
• Goods dominated to services dominated, More Employment,
• Contribution in GDP, More consumption than manufactured goods
Dr.D.Shoba MBA, M.Phil, Ph.D

3. The service sector
 The services sector has been growing at a rate of 8%
per annum in recent years
 More than half of our GDP is accounted for from the
services sector
 This sector dominates with the best jobs, best talent
and best incomes
Dr.D.Shoba MBA, M.Phil, Ph.D

4. SERVICES IN AN ECONOMY
Dorathy Riddle
Dr.D.Shoba MBA, M.Phil, Ph.D

5. The role services in an economy
 Services lies at the very centre of economic activity in any
society.
 Dorathy riddle explains the three important sectors of the
economy that is
 Extractive
 Manufacturing
 Services
Dr.D.Shoba MBA, M.Phil, Ph.D

6. The role services in an economy
 Services are further divided in to
 Business services
(Consultancy, Finance, Banking.)
 Trade services
(Retailing, Maintenance and repair)
 Infrastructure services
(Communications, Transportation)
 Social/ personal services
(Restaurants, Health Care
 Public administration
(Education, Government) ~
Dr.D.Shoba MBA, M.Phil, Ph.D

7. Infrastructure services
 It links all sectors of the economy including the final consumer
 It is intermediaries between the extractive and manufacturing sectors
and as the channel of distribution to the final consumer
 It is pre requisites for an economy to become industrialized
 No advanced society can be with drawn these services
Dr.D.Shoba MBA, M.Phil, Ph.D

8. Business services
 Specialized firms can supply these services to manufacturing firms more
cheaply and more efficiently than the manufacturing firms can supply the
services for themselves.
 Advertising, Consulting, financing and other business functions being
provided for manufacturing sector by service firms
Dr.D.Shoba MBA, M.Phil, Ph.D

9. Social / Personal Services
 It is absolutely necessary for the economy to function
 This services enhance quality of life
 For example
Banking helps transfer of fund
Transportation helps to move products
Other personal services like restaurants, lodging,
cleaning and child care
Dr.D.Shoba MBA, M.Phil, Ph.D

10. Public administration
 It play critical role in providing a stable environment for
investment and economic growth.
 This services are weak or heavily skewed solely by
political or idealistic concerns.
 Essential services are inaccessible for many citizens
Dr.D.Shoba MBA, M.Phil, Ph.D

11. Contributions of Service Industries to
U.S. Gross Domestic Product
Dr.D.Shoba MBA, M.Phil, Ph.D

12. Overview: Why Services Matter
 Services dominate U.S. and worldwide economies
 Services are growing dramatically
 Service leads to customer retention and loyalty
 Service leads to profits
 Services help manufacturing companies differentiate
themselves
Dr.D.Shoba MBA, M.Phil, Ph.D

13. Percent of U.S. Labor Force by Industry
Dr.D.Shoba MBA, M.Phil, Ph.D

14. Percent of U.S. Gross Domestic Product by Industry
Dr.D.Shoba MBA, M.Phil, Ph.D

15. conclusion
 Services are imperative to recognize.
 Services are not peripheral activities.
 Services are integral parts of society
 They are central to functioning of healthy economy
 Services are not only facilitates but also producing ..
 Services are the crucial force for change towards a global
economy
Dr.D.Shoba MBA, M.Phil, Ph.D

16. Difference Between Physical Goods And
Services
Physical goods Services
tangible intangible
homogeneous heterogeneous
Production and distribution are
separated from consumption
Production, distribution and
consumption are simultaneous
processes
A thing An activity or process
Core value processed in factory Core value produced in the buyer-seller
interaction
Customers do not participate in the
production process
Customers participate in production
Can be kept in stock Cannot be kept in stock
Transfer of ownership No transfer of ownership
Dr.D.Shoba MBA, M.Phil, Ph.D

17. Difference Between Physical Goods And Services
 Many services are essentially perishable
 Services are cannot be transported
 Service firms tend to be small
 Standardization in the level of service and quality is
difficult to achieve.
 Many service organisation are labour intensive
 Legal and ethical barriers exists for selected services
 The demand of services in unpredictable
 Difficulty to enter foreign markets
 Limited applicability of portfolio theory
 Difficulties in establishing large market shares
Dr.D.Shoba MBA, M.Phil, Ph.D

18. Comparing Goods and Services
Dr.D.Shoba MBA, M.Phil, Ph.D

19. REASONS FOR GROWTH OF SERVICE
SECTORS
 Demography
 Economic
 Political and Legal
 Social
 Technological
Dr.D.Shoba MBA, M.Phil, Ph.D

20. Demographic
 As there is increase of population,
High birthrate –(Childcare centre, Education,
Institution etc)
As baby boom- the prime target in late eighties
(Fast food, Entertainment, etc)
After age of 55 years- Health care,
Leisure,Tourism.
 As there is any migration of population, this again
cause the need for infrastructure.
Dr.D.Shoba MBA, M.Phil, Ph.D

21. ECONOMIC
 The growth of corporate sector and stock market is the key
indicator
 Economic liberalization and resource mobilization through
capital markets reached heights.
 The growth of large firms has brought greater dependent of
special service providers like market research and
advertising agencies.
 The Economic reforms have ushered consumerism.
 There have been changes in the consumer purchasing
power and spending pattern with middle class explosion
which is now emerging as the consumption community.
Dr.D.Shoba MBA, M.Phil, Ph.D

22. Political and Legal
 Deregulation has opened many service industries (airline and Banking)to more
intense competition and generate greater innovation and expansion
 Many countries strengthen consumer protection law to improve public security
and to protect the environment.
 Governments are intervened to increase trade relationship among nations and
develop tourism and hotel industries.
 Trading blocks such as North American Free Trade Agreement (NAFTA),
European common Market (ECM), Association for South East Asian Nations
(ASEAN), South Asian Association for Regional co-operation (SAARC) etc. to
protect and promote regional interest in the global trade of goods and services
Dr.D.Shoba MBA, M.Phil, Ph.D

23. Social
 The increase of Single person household, smaller
families, and working women mean more
discretionary income, more time for travel and
entertainment and also need for child care services.
 Changing life styles of the masses due to cultural
exchange and communication networks has resulted
in continued emphasis on services
Dr.D.Shoba MBA, M.Phil, Ph.D

24. Technological
 Recent developments in computer science and IT have
brought about convergent of various technologies like
Telecommunication, Entertainment and data
transmission.
 The influence of internet has resulted in increasing
mobility of educated labour force among countries
and paradigm shift in many service industries like
travel, banking, Education and communication
networks has resulted in continued emphasis on
services
Dr.D.Shoba MBA, M.Phil, Ph.D

25. Most products have a service
component
They could be
 Equipment based
 People based – varying skill levels
Dr.D.Shoba MBA, M.Phil, Ph.D

26. Services could meet
 Personal needs – haircuts, tution, massage parlours
 Business needs – courier services, office cleaning
services, delivering fresh flowers
Dr.D.Shoba MBA, M.Phil, Ph.D

27. Characteristics of services
 Intangibility
 Inseparability
 Perishability
 Variability
Dr.D.Shoba MBA, M.Phil, Ph.D

28. The three ‘P’s of Service Marketing
 People
 Physical evidence
 Process
Dr.D.Shoba MBA, M.Phil, Ph.D

29. Difference between the desired service and the
adequate service
Dr.D.Shoba MBA, M.Phil, Ph.D

30. Service Encounter Themes
 Recovery
 Adaptability
 Spontaneity
 Coping
Dr.D.Shoba MBA, M.Phil, Ph.D

31. Recovery
Don’t
 Ignore customer
 Blame customer
 Leave customer to fend
for himself
 Downgrade
 Act as if nothing is
wrong
 ‘pass the buck’
Do
 Acknowledge problem
 Explain causes
 Apologise
 Compensate/upgrade
 Lay out options
 Take responsibility
Dr.D.Shoba MBA, M.Phil, Ph.D

32. Adaptability
Don’t
 Promise and fail to keep
them
 Show unwillingness to
try
 Embarrass the customer
 Laugh at the customer
 Avoid responsibility
Do
 Recognise the
seriousness
 Acknowledge
 Anticipate
 Accommodate
 Adjust
 Explain rules/policies
Dr.D.Shoba MBA, M.Phil, Ph.D

33. Spontaneity
Don’t
 Exhibit impatience
 Yell/laugh/swear
 Steal from customers
 Discriminate
 Ignore
Do
 Take time
 Be attentive
 Anticipate needs
 Listen
 Provide information
 Show empathy
Dr.D.Shoba MBA, M.Phil, Ph.D

34. Coping
Don’t
 Take customer’s
dissatisfaction
personally
 Let customer’s
dissatisfaction affect
others
Do
 Listen
 Try to accommodate
 Explain
 Let go of the customer
Dr.D.Shoba MBA, M.Phil, Ph.D

35. Need of on Services
 Services can provide higher profit margins and growth
potential than products
 Customer satisfaction and loyalty are driven by service
excellence
 Services can be used as a differentiation strategy in
competitive markets
 Growing consumer demand –meeting consumer
requirement – to achieve profitability
 A major service innovation on the horizon is involved in
home retailing. (Dance, yoga,Driving training, travel
services, day care, clinics, etc
 Consumer services budget helps the individual day to day
expenses.
Dr.D.Shoba MBA, M.Phil, Ph.D

36. Reason for lagging creative services
marketing
 Most service firms lagged in the area of creative
marketing
Limited view of marketing
Lack of competitions
Lack of creative management
No obsolescence and
Lack of innovation in the distribution of services.
Dr.D.Shoba MBA, M.Phil, Ph.D

37. Obstacles in Services Marketing
 There is a lot of difficulties in
 Factors of intangibility and inseparability
 Coming up with objectives and definition of
acceptable service quality
 Make comprehension of service marketing
 Expectation of continuous innovation and ingenuity
and high quality of services in convenient location for
consumers as well as business people.
 There is an opportunities for more imagination and
creative innovation than does product marketing.
Dr.D.Shoba MBA, M.Phil, Ph.D

38. Challenges in services
 Constantly develop new services that will better meet
customer needs
 Improve upon the quality and variety of existing
services
 Provide and distribute these services in a matter that
the best serves the customer.
Dr.D.Shoba MBA, M.Phil, Ph.D

39. Service Factory
(Low Labour intensity /
low interaction and
customisation)
Service Shop
(Low Labour intensity /
high interaction and
customisation)
Mass service
(High Labour intensity
/ low interaction and
customisation)
Professional Service
(High Labour intensity /
low interaction and
customisation)
•Fighting cost
increases
•Maintaining
quality
• Reacting
customer
intervention
process
•Managing
advancement
of people
•Managing flat
hierarchy
•Gaining
employee
loyalty
• Marketing
•Making service
warm
•Attention to
physical
surroundings
•Managing fairly
rigid hierachy
High Labour intensity
Hiring , Training, Methods development and
control, Employee welfare, Scheduling work
forces, Control of far- flung geographical
locations, start ups of new units, Managing
growth
Low Labour intensity
Capital decision, Technological
advances, Managing demand to avoid
peaks
Scheduling service delivery
Dr.D.Shoba MBA, M.Phil, Ph.D

40. Low Labour intensity / low interaction and
customization
 Low degree of interaction and customization face a
stiffer marketing challenge.
 Try to make the service warm and exciting even
though they may not give personal attention a
customer might want.
 Attention to physical surroundings and layouts
becomes more important
Dr.D.Shoba MBA, M.Phil, Ph.D

41. Low Labour intensity / Little or high
interaction and customization
 Standard Operating Procedures can safely be
instituted.
 Fairly rigid relationships between levels
Dr.D.Shoba MBA, M.Phil, Ph.D

42. High Labour intensity / Little or high
interaction and customization
 Management deals with higher costs and more
talented labour
 Keeping cost down and maintaining quality becomes a
challenge.
 Need talented employees
 Flat hierarchical control
 Less rigid relationship between superiors and
subordinates.
 Hopping job to job become challenge as well
 More concentration in consumer intervention process
Dr.D.Shoba MBA, M.Phil, Ph.D