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SERVICE ECONOMY
THE SERVICE ECONOMY
Chapter 1
McGraw-Hill/Irwin
Learning Objectives
Describe the central role of services in an economy.
Identify and differentiate the five stages of economic activity.
Describe the features of preindustrial, industrial, and
postindustrial societies.
Describe the features of the experience economy contrasting
the consumer (B2C) with the business (B2B).
Explain the essential features of the service-dominant logic.
Identify and critique the six distinctive characteristics of a
service operation and explain the implications for managers.
Describe a service using the service package dimensions.
Use the service process matrix to classify a service.
1-2
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
1-3
1-4
% of World
Labor
% Ag
% Goods % Services
China
21.0
50
15
35
India
USA
17.0
4.8
60
2
17
20
23
78
Indonesia
Brazil
3.9
3.0
45
23
16
24
39
53
Russia
Japan
2.5
2.4
12
5
23
26
65
69
Nigeria
2.2
70
10
20
Banglades
h
2.2
63
11
26
Germany
1.4
28
69
1-5
MANUFACTURING
Services inside company:
Finance
Accounting
Legal
R&D and design
BUSINESS SERVICES
Consulting
Auditing
Advertising
Waste disposal
INFRASTRUCTURE SERVICE
Communications
Transportation
Utilities
Banking
DISTRIBUTION
SERVICES
Wholesaling
Retailing
Repairing
PERSONAL SERVICES
Healthcare
Restaurants
Hotels
CONSUMER
(Self-service)
GOVERNMENT SERVICES
Military
Education
Judicial
Police and fire protection
1-6
Percent
2012
1-8
Game
PreAgainst
Industrial Nature
Industrial
Postindustrial
Predominant
Activity
Agriculture
Mining
Use of
Human
Labor
Raw
muscle
Against
Goods
Machine
fabricated production tending
nature
Among Services
Persons
Artistic
Creative
Intellectual
Standard
Unit of
of Living
Social Life Measure Structure
Extended
household
power
Individual
Technology
SubRoutine
Simple hand
sistence Traditional
tools
Authoritative
Quantity
of goods
Community Quality of
life in terms
health,
education,
recreation
Bureaucratic Machines
Hierarchical
Interdependent
Information
1-9
Retail and
wholesale trade
14%
Manufacturing
9%
Federal government 2%
Information 2%
Professional and
business services
12%
Health care
and social assistance
11%
Educational services
2%
Leisure and hospitality
9%
Financial services
6%
1-10
1-11
Economic Evolution
Economy
Agrarian
Industrial
Service
Experience
Economic
Offering
Food
Packaged
goods
Commodity
service
Consumer
services
Business
services
Function
Extract
Make
Deliver
Stage
Co-create
Nature
Fungible
Tangible
Intangible
Memorable
Effectual
Attribute
Natural
Standardized
Customized
Personal
Growth
Method of
Supply
Stored in
bulk
Inventoried
Delivered on
demand
Revealed over
time
Sustained over
time
Seller
Trader
Producer
Provider
Stager
Collaborator
Buyer
Market
Customer
Client
Guest
Collaborator
Expectation
Quantity
Features
Benefits
Sensations
Capability
1-12
Active
Immersion Esthetic
(Tourist)
Escapist
(ScubaDiving)
1-13
1-14
Essential Feature
Examples
Creative
Present ideas
Advertising, theater
Enabling
Act as intermediary
Transportation, communications
Experiential
Presence of customer
Extending
Entrusted
Contractual agreement
Information
Access to information
Innovation
Problem solving
Access to specialists
Consultants, counseling
Quality of life
Improve well-being
Regulation
Non-ownership Classification of
Services
Type of Service
Customer value
Examples
Management Challenge
Goods rental
Housekeeping and
achieving economies
of scale
Labor and
expertise
Expertise is a renewable
resource, but time is
perishable
Physical facility
usage
Gain admission to a
facility for a period of
time
Network usage
Gain access to
participate
Implications of Rental/Usage
Paradigm
Creates the option of renting a good upon demand
Service Package
1-20
1-21
1-22
Low
High
Professional Service
* Doctors
* Lawyers
* Accountants
* Architects
1-23
1-24
1-25
dealers?
1-27
1-28
1-29
success?
Given the example of Xpresso Lube, what other services
1-31
Discussion Topics
Illustrate how the type of work he or she does influences a persons
1-33