Introduction

One of the chief trends in our modern economy in the past two decades has been the dramatic growth of services. In the major European countries, America and Japan, more people are employed in services than in all other sectors of the economy put together. Roth public and private sector services in these countries account for between 60 and 70 per cent of national output. In international trade, services make up nearly a quarter of the value of total world exports.2 Service jobs include not only those in service industries — hotels, airlines, banks, telecommunications and others - bnt also service jobs in product-based industries, such as corporate lawyers, medical staff and sales trainers. Consumer services are marketed to individuals and households, while industrial services are those offered to business and other organizations.

The increase in demand for consumer and industrial services has been attributed to a number of factors. First, rising affluence has increased consumers' desire to contract out mundane tasks such as cleaning, cooking and other domestic activities, giving rise to a burgeoning convenience industry. Second, rising incomes and more leisure time have created greater demand for a whole array of leisure services and sporting activities. Third, higher consumption of sophisticated technologies in the home {e.g. home computers, multimedia entertainment equipment, security systems) has triggered the need for specialist services to install and maintain them. In the case of business clients, more complex markets and technologies mean that companies are in greater need of the expertise and knowledge of service organizations, such as market research agencies, marketing and technical consultants. Furthermore, the rising pressure on firms to reduce fixed costs means that many are buying in services rather than incur the overheads involved in performing specialised tasks in-house. The need to remain flexible has also led to firms hiring services that provide use without ownership. Finally, an increasing number of firms are keen to focus on their core competences. They are beginning to contract out non-core activities, such as warehousing and transportation, thus stimulating the growth of specialist business service organizations. All these developments have, in turn, led to a growing interest in the special problems of marketing services.

Service industries vary greatly. In most countries, the government sector offers services: for example, legal, employment, health care, military, police, fire and postal services, education and regulatory agencies. The private non-profit sector offers services such as museums, charities, churches, colleges, foundations and hospitals, A large part of the business sector includes profit-oriented service suppliers like airlines, banks, hotels, insurance companies, consulting firms, medical and law practices, entertainment companies, advertising and research agencies, and retailers.

As a whole, selling services presents some special problems calling for special marketing solutions. Let us now examine the nature and special characteristics of service organizations.

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