586 The Marketing Book
Services have had a major impact on
national economies and many service indus-
tries have facilitated improved productivity
elsewhere in the manufacturing and agricul-
tural sectors. As an example, transport and
distribution services have often had the effect
of stimulating economic development at local
and national levels (e.g. following the improve-
ment of rail or road services). One reason for
many developing countries’ inability to fully
exploit their natural resources has been the
ineffectiveness of their distribution services.
It could even be argued that the economic
development which occurred in England dur-
ing the early part of the nineteenth century was
really a services revolution rather than an
‘industrial revolution’. Visions of new technolo-
gies involving steam power, factory systems
and metal production have led to the dominant
view that England’s development was prima-
rily a result of progress in the manufacturing
sector. But could the industrial revolution have
happened without the services sector? The
period saw the development of many services
whose presence was vital to economic develop-
ment. Without the development of railways,
goods could not have been distributed from
centralized factories to geographically dis-
persed consumers and many people would not
have been able to get to work. Investment in
new factories called for a banking system that
could circulate funds at a national rather than a
purely local level. A service sector emerged to
meet the needs of manufacturing, including
intermediaries who were essential to get manu-
facturers’ goods to increasingly dispersed mar-
kets. Today, we continue to rely on services to
exploit developments in the manufacturing
sector.
There is little doubt that the services sector
has become a dominant force in developed
economies, accounting for about three-quarters
of all employment in the USA, UK, Canada and
Australia. There appears to be a close correla-
tion between the level of economic develop-
ment in an economy (expressed by its GDP per
capita) and the strength of its service sector.
However, there is the continuing perception
among some groups of people that service
sector jobs are somehow second rate, often
associated with low paid, unskilled and casual
employment. It is difficult to generalize on this
point, but different cultures at a similar level of
economic development may view their service
industries quite differently. In the UK and
Germany, service is often associated with servi-
tude, while in the USA being of service almost
goes to the heart of the national culture.
The academic literature on marketing the-
ory and applications has been dominated by
the manufactured goods sector. This is prob-
ably not surprising, because marketing in its
modern form first took root in those manu-
facturing sectors that faced the greatest com-
petition from the 1930s onwards. In growing,
the services sector has become more com-
petitive and therefore taken on board the
principles of marketing. Deregulation of many
services and rising expectations of consumers
have had a dramatic effect on marketing
activities within the sector.
The marketing literature identifies shifts in
academics’ and practitioners’ focal points dur-
ing the evolution of the discipline. Services
marketing emerged when it became insufficient
for companies to simply sell a better tangible
product. This is consistent with population
ecologists’ argument that competitive rivalry in
a market intensifies as the carrying capacity of
the market falls, resulting in new forms of
differentiation and value creation (Swamina-
than and Delacroix, 1990). With services now
being a standard feature of many tangible
goods, many have argued that new forms of
differentiation have become necessary. The
quality of buyer–seller relationships has fea-
tured strongly in many companies’ marketing
strategies from the 1980s. This has been seen in
the car industry, for example, where a tradi-
tional focus on design features such as reliabil-
ity, styling and efficiency was supplemented
from the 1970s with a focus on added service
features. But when these added services, such
as extended warranties and financing facilities,