With 81 percent of the U.S employment comprised of the service industry, it should come to no surprise the importance of understanding why this trend exists and will remain for years to come. Although consumers will continue to demand goods for purchase, decoding the reasoning behind the increasing demand of services is crucial for businesses and aspiring entrepreneurs. Furthermore, it is important to understand such characteristics as intangibility, inseparability, heterogeneity, and perishability that differentiate services from traditional goods purchased by consumers. Even though services and goods have their distinct differences, both of their industries complement each other in such a way that each enjoys success from its counterpart.
Trending Factors of the Service Industry
Throughout the twentieth century, the service industry has grown to become the largest component of the U.S economy (Cleveland, 1999). Much of this growth is a result of demand from demographics. With the baby boom and aging population, people are in need of medical care such as nurse, home health, and physical therapy. In addition, more and more households are comprised of Two-earners requiring the need for services such as child-care, housecleaning, and lawn-care. Along with the population growth, technology growth is apparent, causing an increase in demand for careers such as computer engineers, systems analysts, and information managers. Furthermore, companies that manufacture products can attribute a portion of their success to the service sector. For an example, customers who look to purchase products such as copy machines, look to the same manufacturer to provide maintenance and repair services to their purchased products. This is one example of how the two sectors benefit each other and provide a form of complementary growth for each (Ferrell, Hartline, Lamb, Hair, & McDaniel, 2011).
With this ever-growing demand for services from demographic influences and technological advancements, the robust service industry offers attractive opportunities for aspiring entrepreneurs. Service businesses often mandate a much smaller initial investment as opposed to the more typical, larger capital investment, required to launch a product themed business such as manufacturing, wholesaling, or retailing. For an example, new service businesses often start out of the home, therefore avoiding additional expenses such as renting, buying, or building a location for the newfound business. In addition to some of the examples previously mentioned, these start up services providers can include consulting, tutoring, personal shopping, event planning, as well as computer and electronic technicians due to the increased complexity of high-tech consumer products (Service Businesses, 2014).
Distinguishing Services from Goods
Services differentiate themselves from traditional goods by the use of four distinct characteristics that include intangibility, inseparability, heterogeneity, and perishability. Intangibility is the most basic differentiating characteristic between services and goods. Unlike goods, services are not physical and cannot be touched, seen, tasted, heard, or felt. Such characteristics can make services difficult to evaluate and review prior to the consumer’s purchase, otherwise known as search qualities. However, compared to goods, services exhibit more experience and credence qualities. An experience quality is a characteristic that can be assessed only after use, such as one’s experience on a vacation. In addition to experience quality, credence quality is another characteristic assessed by consumers after purchase. Unfortunately, consumers can have difficultly assessing such qualities due to the lack of knowledge or experience in such fields as medical and consulting services. Because of these characteristics, marketers often have difficulties communicating the benefits of intangible services when compared to the benefits to that of a