Page 539 - Business Principles and Management

Unit 6

19.3 Service Businesses

Goals Terms
• Identify the characteristics of ser- • intangible • responsiveness
vices that make them different • tangibles • assurance
from products. • reliability • empathy
• Describe the ways businesses
maintain product and service
quality.

ervice businesses are the fastest-growing segment of our society. More than
two-thirds of the U.S. labor force is now employed in service-producing busi-
Snesses or service jobs. Over 70 percent of economic activity in the United
States is service related. Therefore, the United States is changing from the world’s
leading manufacturing economy into its leading service economy. Many service
businesses are quite small and employ only a few people, and others have total
sales of millions of dollars each year and employ thousands of people.

The Nature of Services

Figure 19-3 illustrates that services are very different from tangible products. As
you learned in Chapter 1, services are activities of value that do not result in the
ownership of anything tangible. Traditional service businesses include theaters,
travel agencies, beauty and barbershops, lawn care businesses, and insurance
agencies. New types of services are emerging as well, such as online music and
video download services, comprehensive financial services, information manage-
ment, and human resource management.

HOW SERVICES DIFFER FROM PRODUCTS

Services have important characteristics that make them different from products.
These differences in form, availability, quality, and timing require unique operat-
ing procedures for service businesses.

FORM Services are intangible. Intangible services do not have a physical product,
they cannot be seen or examined before purchase, and they do not exist after the
consumer uses them. When you go to a theater to see a play, you rely on a review
in the newspaper or what you have heard from others to decide if it is something
you want to attend. If a company hires a carpet-cleaning business for its offices,
it will need to bring them back when the carpets must be cleaned again.

AVAILABILITY A service cannot be separated from the person or business supplying
it. Dental care requires a dentist, a concert requires an orchestra, and tax prepa-
ration requires an accountant. People who purchase services are also purchasing

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