Page 344 - Foundations of Marketing

Developing and Managing Goods and Services | Chapter 11 311

The increasing importance of services in the U.S. economy has led many people to call
the United States the world’s first service economy. In most developed countries, including
Germany, Japan, Australia, and Canada, services account for about 70 percent of the gross
domestic product (GDP). More than one-half of new businesses are service businesses, and
service employment is expected to continue to grow. These industries have absorbed much of
the influx of women and minorities into the workforce. A practice that has gained popularity
among a number of U.S. businesses is homesourcing , in which customer-contact jobs, espe-
cially at call centers, are outsourced into the homes of workers. Staffing agencies like Rhema
Business Solutions are dedicated to providing homesourcing employees to organizations in a
variety of industries, including nursing, marketing and sales, advertising, Web development,
and writing. Companies as diverse as 1 - 800 -FLOWERS , J.Crew, and Office Depot all utilize
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homesourcing for some tasks.
Characteristics of Services

The issues associated with marketing service products are not exactly the same as those associ-
ated with marketing goods. To understand these differences, it is first necessary to understand
the distinguishing characteristics of services. Services have six basic characteristics: intangi-
bility, inseparability of production and consumption, perishability, heterogeneity, client-based
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relationships, and customer contact.
Intangibility homesourcing A practice in
which customer-contact jobs,
As already noted, the major characteristic that distinguishes a service from a good is intan- especially at call centers, are
gibility. Intangibility means a service is not physical and therefore cannot be touched. outsourced into the homes of
For example, it is impossible to touch the education that students derive from attending workers
classes; the intangible benefit is becoming more knowledgeable. In addition, services intangibility A service that
cannot be physically possessed. Figure 11.5 depicts a tangibility continuum from pure is not physical and cannot be
goods (tangible) to pure services (intangible). Pure goods, if they exist at all, are rare touched

Figure 11.5 The Tangibility Continuum

Sugar

House

Automobile

Custom-made clothing
Good-dominant Service-dominant
products Restaurant-dining experience products
(tangible) (intangible)
Air travel

Health care

Ad agency services

Education

From Pride/ Ferrell , Marketing 2014, 17E. 2014 Cengage Learning.

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