M
arketing theory and practice developed initially in connection with physical
products such as toothpaste, cars, and steel. Yet one of the major megatrends of
recent years has been the phenomenal growth of services. In the United States, service
jobs now account for 79 percent of all jobs and 74 percent of gross domestic product.
According to the Bureau of Labor Statistics, service occupations will be responsible for
all net job growth through the year 2005.^1 These numbers have led to a growing inter-
est in the special challenges and opportunities of services marketing.^2
More and more market offerings now contain a service component, both to
meet the needs of the targeted customer segment and to create a distinctive differen-
tiation for competitive reasons. Many manufactured goods are supported by services
such as warranties(formal statements of expected product performance) or guarantees
(assurances that the product can be returned if its performance is unsatisfactory). By
judiciously offering one or more service features, a smart marketer can enhance its
image while adding value that, in turn, attracts loyal customers and builds long-term
profits.
THE NATURE OF SERVICES
Service industries are quite varied. The government sector,with its courts, employment
services, hospitals, loan agencies, military services, police and fire departments, post
office, regulatory agencies, and schools, is in the service business. The private nonprofit
sector,with its museums, charities, churches, colleges, foundations, and hospitals, is in
the service business. A good part of the business sector,with its airlines, banks, hotels,
insurance companies, Internet service providers, law firms, management consulting
firms, medical practices, motion-picture companies, plumbing-repair companies, real
estate firms, and Web-based services, is in the service business. Many workers in the
manufacturing sector,such as computer operators, accountants, and legal staff, are really
service providers. In fact, they make up a “service factory” that provides services to the
“goods factory.”
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Designing and
Managing Services
We will address the following questions:
■How are services defined and classified?
■How can service firms improve their competitive differentiation, service quality, and
productivity?
■How can goods-producing companies improve their customer support services?