by Service economy can refer to one or both of two recent economic developments:
The increased importance of the service sector in industrialized economies. The current list of Fortune 500 companies contains more service companies and fewer manufacturers than in previous decades.
The relative importance of service in a product offering. The service economy in developing countries is mostly concentrated in financial services, hospitality, retail, health, human services, information technology and education. Products today have a higher service component than in previous decades. In the management literature this is referred to as the servitization of products or a product-service system. Virtually every product today has a service component to it.
Services include a wide range varying from education, transportation, hospitality, finance, real estates, accounting, banking, insurance, taxation, consultancy, health care etc. These services are together called the services sector or the tertiary sector.
Everything that grows also changes its structure and change is inevitable. A human being passes through different phases-infancy to old age and during which he constantly changes in terms of perception, attitude, physical and mental attributes etc.
Similarly a growing economy changes the proportions and interrelations among its basic sectors namely agriculture, industry, and services and between other sectors like rural and urban, public and private, domestic-and export-oriented etc. All growing economies are likely to go through these stages.
A service is a set of consumable and perishable benefits delivered by a service house to a customer to ensure customer satisfaction.
Goods and services are produced in every economy. In a crude way, a good is something one can take with him after purchase, whereas a service cannot be taken as it is intangible. Example when a person goes to a dentist he use the services of the dentist and returns with a relief. In the process he does not get any physical commodity but still he has consumed a service.
Core goods providers provide a significant service component as part of their businesses. For example, automobile manufacturers provide extensive spare parts distribution services to support repair centers at dealers. Core service providers must integrate tangible goods with intangible services.
For example, a cable television company must provide cable hookup, repair services and also high-definition cable boxes. Pure services, such as may be offered by a financial consulting firm, may need little in the way of facilitating goods, but what they do use such as textbooks, professional references, and spreadsheets are critical to their performance.
The recent services are the ones related to IT, BPO, KPO, BT etc. These sectors are growing phenomenally.
A commercial service is a type of economic activity that is intangible, cannot be stored and does not result in any ownership. A service is consumed at the point of sale itself. Services are one of the two key components of economics, the other one being goods.
Sometimes services are difficult to identify because they are closely associated with a good; such as the combination of a diagnosis with the administration of a medicine. No transfer of possession or ownership takes place when a service is sold.
The American Marketing Associations defines services as “(1) activities, benefits or satisfaction which are offered for sale, (2) are provided in connection with the sale of goods”. The services described in the second half of the definition are those included in the sale of goods to the customer, viz., pre-sale and after sale services, e.g., services on installation of machinery, its maintenance and repairs, credit and delivery services etc.
The first part of the said definition, viz., “activities, benefits or satisfactions which are offered for sale.” The marketing of these kinds of services usually does not include the sale of goods to the customer. Such activities, benefits or satisfactions offered for sale are intangible in nature, i.e., they are not concrete objects which can be seen, tasted, felt, moved and so on.
There is a regular market for such services represented by activities, benefits and satisfactions offered for sale by providers of services. These services may be labour services, personal services, professional services or institutional services such as offered by transport, banking, insurance, warehousing, advertising and such other services organisations.
When a customer buys a service in the service market be buys the time, knowledge, still or resources of someone else who is the provider or supplier of a service. The buyer receives satisfactions or benefits from the activities of the provider who be an individual, a firm or a company, i.e., and institution specialising in selling certain benefits or satisfaction.
The importance of service Sector in economy is growing rapidly.
- Services account for more than 60 percent of GDP worldwide
- Almost all economies have a substantial service sector
- Most of the new employment is provided by services (Fastest growth expected in knowledge-based industries)
- Strongest growth area for marketing
