Q1.

role of service sector in economy

The economic development of any country is directly dependent on the advancement and progress of
the three sectors of the economy viz. primary sector, secondary sector, and tertiary sector. The
primary sector of an economy making direct use of natural resources that are involved in the
production and extraction of raw materials from agriculture, fishing, forestry, mining, dairy, etc. and
secondary sector also known as the industrial sector is associated with the activities which involve the
conversion of raw material into usable products. The majority of India’s population is engaged in the
primary sector which in turn is the main reason for underemployment in the country. Though in the
last couple of years, manufacturing has been a great focus not much growth has been seen in the
secondary sector (includes heavy manufacturing, light manufacturing, energy-producing, food
processing, etc.) due to lack of infrastructure. So in order to quickly absorb this underemployed
population, there is a need to shift to the tertiary sector.
The tertiary sector also known as the service sector involves a variety of things in its umbrella. Some
of which are health and welfare, tourism, leisure, and recreation activities as well as retailing and
sales of goods to the people. In the past six years, the service sector has undergone a great evolution
which in turn has given it the independent status of the productive sector of the country. Moreover,
this sector also provides a major impact on foreign exchange and thus contributes greatly to the
modern economic development of the country.
Five Main Advantages of the Service Sector
1.No Inventory: In the service sector, there is no need to built-up a reserve of inventory that needs to
be stored in a warehouse. Because the product that you are selling is your skills and expertise wherein
you’ll only need to have the necessary equipment required to perform the required services, no
warehouse full of inventory needed.
2.Easy to start up: In comparison to other business industries, starting a business in the service sector
is relatively easy. Because business in the service sector requires little more than a license, phone, and
a person with the required skills and expertise to get up and going. This not only makes it quite easier
but also very affordable to get started.
3.Flexible hours: Working in the service sector provides flexibility in the working hours, which in turn
allows you to get an opportunity to further increase your skill and education and to accomplish other
important tasks at times you might not otherwise be able to.
4.Greater adaptability to changes: The service sector companies are able to adapt to the changes in
customer needs much easily and quickly in comparison to product-based companies.
5.Provides job even during economic crisis: During an economic dip, when people are cutting down
their expenditure and are only paying for basic necessities, the service sector helps to keep the job
and bring in the revenue as service sector experts are always in demand.
Q2.What Are the Causes of Rapid Growth in the Service Industry?
The diverse service industry is seeing a general growth of services trend and Market Research
forecasts the majority of job growth in the United States will come from this sector between 2016 to
2020, with a 5.4% overall growth rate being projected in the time period. The service-driven economy
accounts for a large number of jobs in the United States in general.
Rising Demand for Services
Demand for services is on the rise with a stable middle class and growth in upper-income families. A
sector of the economy becoming less concerned about material needs. In the consumer sector, this
leads to increasing demand for services such as health, education and entertainment.
In business, companies recognize that many activities can be handled more efficiently by a service
provider. Outsourcing services allows a business to concentrate on the activities that are critical to its
success. These are called core activities in the world of professional services, and they include sales
and marketing, accounting, technology, quality, product and service delivery, management, human
resources, finance and product development.
The digital world has also opened the door to more service based growth with disruptive based
technology and the ability to operate a business with location independence. The local economy is no
longer a limiting factor and businesses take their services online and offer them to a larger audience.
An accountant in a rural community for example, can grow a national client base through an online
business. This opens the door to more operators looking to expand alongside the general _growth of
service_s on a national level.
Disruptive Technology
Outsourcing services is also important if a business is undergoing change or shifting the business
model to capitalize on a growing freelance market that offers qualified service providers on a
contractual basis.
Technology is driving major shifts in the service sector as well with traditional roles like taxi services
being replaced by Lyft, Uber and other options that connect a large, part-time workforce to a specific
market. Airbnb opened the rental market to individual property owners by cutting out management
companies and placing a large audience directly in touch with owners.
Numerous sectors of the service economy are seeing shifts in the way employment and labor is
perceived as new technologies disrupt markets and open more opportunities to individuals and
contractors. The benefits that come with traditional employment are often lost but the overall service
sector is open to more individuals and the technology ultimately facilitates growth in what were once
perceived as locked markets.
A taxi medallion in New York City was once highly valued and it served as a control on the market. The
introduction of Lyft and Uber however opened the door to commercial driving for everyone meeting
the minimum qualifications. The entire market has now shifted and a large number of people are
using personal vehicles for monetary gain in the marketplace.
Assist With Complexity of the Business Environment
Another factor in the growth of the service sector is the continuing complexity of business, according
to the Bureau of Labor Statistics. Firms that offer advisory services are helping small businesses to
deal with legislative changes, emerging technologies and marketing challenges by giving them access
to skills and knowledge that they do not have in-house.
The service sector is benefiting from improved _development of service marketing a_s firms
communicate their message more efficiently. Building understanding of the benefits of professional
services is critical to the growth of the sector.
Q3.Methods of Providing Physical Evidence
1.Recognize the Strategic Impact of Physical Evidence
Physical evidence plays a big role in shaping the perceptions and attitudes of consumers.
In the case of many firms, the first step towards providing physical evidence is recognizing the need
and its impact of it on customers and the service delivery process.
They then take steps to examine the potential of the physical evidence and make a strategic plan. It is
therefore very essential that the physical evidence be a part of the strategic vision and mission of the
company.
2.Map the Physical Evidence of Service
The next critical step is to map the various elements of the service. The existing elements of physical
evidence and service process should be visible to everyone.
This can be done effectively by employing the tool of service blueprint or service map. The service
blueprint has many advantages.
One of the main advantages that it confers is that it allows the service firm to capture the many
physical evidence opportunities. The people, process, and physical evidence can be very clearly
visualized in the service blueprint.
3.Assess and Identify Physical Evidence Opportunities
After identifying the various types of physical evidence in the service paradigm, the next step is to
look for the scope for improvement in the various service elements.
It is important to look for missed opportunities in the current service design.
For example, the blueprint may show the organization that very little of the physical evidence is
visible to the consumers.
The organization can thus devise a strategy for making more elements of the physical evidence visible
to the consumer so that the efficiency of the service is improved.
4.Be Prepared to Update and Modernize the Evidence
It has been seen that the service specifications for physical evidence need to be constantly
modernized and upgraded.
This is also an outcome of fashion and colours, styles, and combinations need to be periodically
changed so that different messages can be relayed to the target consumers.
5.Work Cross-Functionally
The communication or relaying of the organizational messages to the target segment is a very
important aspect of marketing.
The messages should be consistent and all the physical evidence should be present in such a manner
that the message that is relayed to the consumer is consistent.
This also means that the different departments in the organization need to work in a cohesive and
synchronized manner.
Q4.Services marketing
Services marketing is a specialized branch of marketing which emerged as a separate field of study in
the early 1980s, following the recognition that the unique characteristics of services required different
strategies compared with the marketing of physical goods.
Significance of services marketing
1. Generation of employment Opportunities :-
The components of the service sector are wide and varied. For example, the service sector includes
personal care services, education services, medicare services, communication services, tourism
services, hospitality services, banking services, insurance services, transportation services,
consultancy services, etc The organized and systematic development of the service sector would
create enormous employment opportunities. Application of marketing principles in the I service
sector is instrumental to the development of the economy. However, it is appropriate to mention that
India has not been successful in utilizing the potential of the service sector. In USA about 80 per cent
of job opportunities are offered by the service sector compared to India's 60%. So, the significance of
the service sector lies in its capacity to create job opportunities. If the service sector is properly
developed, it will solve the problem of unemployment in India to a great extent. After liberalisation
policy, the service sector in India has been emerging as a dominant component in the economy.
2. Optimum Utilization of Resources :- India is bestowed with rich resources. Particularly, the human
resources available in India favour the growth of the service sector. While the labour content in most
manufacturing activities is dropping steadily with use of technology, the labour content in the service
sector is comparitively high. As India is rich in human resources, service sector can grow steadily.
Moreover, service sector offers excellent export opportunities too. In fact, the important agenda of
the World Trade Organization (WTO) is opening up of market for services. So, by exploiting these
factors, India can maximize its services export. Though its performance in the export of computer
software is quite commendable already, it should concentrate on other areas as well. Service firms
such as personal care services, the entertainment services, tourism services, hotel service contribute
to the growth of the economy without consuming any natural resources. In a sense, the growth of
service firms of this kind conserve natural resources. Thus, services marketing help conserve the
valuable resources for future generations.
3. Capital Formation :– There are indications that Services will grow more rapidly in the near future.
Economic, social and political factors signal an expansion of the service sector. Investments and job
generations are far greater in the service sector compared to manufacturing. It is estimated that
telecom alone will account for an investment of Rs. 150,000 crores in the coming years. Investment
encourages capital formation. For the development of a nation, the flow of capital should be directed
towards the most productive uses. If investments are made in the service sector, it will contribute to
the nation-building process. With increased developmental activities, the per capital income increases
which, in turn, facilitates capital formation. Performance of profitable services can absorb higher
investments, thereby accelerating the rate of capital formation.
4. Increasing the Standard of Living :- The standard of living of the people in any country would be
decided on the basis of quality and standard of products consumed or services availed in the day-to-
day living. Any development is transparent only when the living conditions of the masses improve.
When compared with developed countries, the standard of living in India is far from satisfactory.
Standard of living cannot be improved by offering more opportunities for earnings. On the other
hand, the standard of living is determined by the availability of goods and services for citizens and a
wise spending on them. The development of services industry is sure to promote the standard of
living of the people.
5. Use of Environment-friendly Technology:- now-a-days, almost all services are found technology-
driven. Developed countries are making full use of latest technology while rendering services.
Technologies used by service generating organisations such banks, insurance companies, tourism,
hotel services, communication services. and education services are not detrimental in any way to the
environment. On the contrary, technologies used in manufacturing organisations may have harmful
effects on the environment. So, services industry do not pollute the environment which is indeed
laudable.
Q5.Explain Service Quality Gap and Diagram
GAP 1: Gap between Management Perception and Customer Expectation
This gap arises when the management or service provider does not correctly analyze what the
customer wants or needs. It also arises due to insufficient communication between contact
employees and managers. There is a lack of market segmentation. This Gap occurs due to insufficient
market research. For Instance- A cafe owner may think that the consumer wants a better ambience in
the cafe, but the consumer is more concerned about the coffee and food they serve.
GAP 2: Gap between Service Quality Specification and Management Perception
This gap arises when the management or service provider might correctly comprehend what the
customer requires, but may not set a performance standard. It can be due to poor service design,
Inappropriate Physical evidence, Unsystematic new service Development process.
An example would be restaurant Managers who may tell the waiters to provide the order of the
consumer quick, but do not specify “How Quick”.
GAP 3: Gap between Service Quality Specification and Service Delivery
This gap may arise in situations existing to the service personnel. It may occur due to improper
training, incapability or unwillingness to meet the set service standards. It can be due to inappropriate
evaluation and compensation systems. Ineffective Recruitment is the main cause of this gap.
The failure to match the supply and demand can create this gap. There is also a lack of empowerment,
Perceived Control, and framework. An example would be a restaurant having very specific standards
of the food communicated but the restaurant staff may not be given proper instruction as to how to
follow these standards.
GAP 4: Gap between External Communication and Service Delivery
Consumer Expectations are highly influenced by the statements made by the company
representatives and advertisements. This gap arises when these assumed expectations are not
fulfilled at the time of Delivery of Service.
An example would be a restaurant that has printed on its menu that it serves 100% Vegetarian Food
but in reality, it serves Non-Vegetarian Food as well. In this situation, consumer expectations are not
met.
GAP 5: Gap between Experienced Service and Expected Service
This gap arises when the consumer misunderstands the service quality. For Instance, A Restaurant
Manager may keep visiting their consumer to ensure quality check and consumer satisfaction, but the
consumer may interpret this as an indication that something is fishy or there is something wrong in
the service provided by the restaurant staff.
Q6.Service Quality
Every customer has an ideal expectation of the service they want to receive when they go to a restaurant or
store. Service quality measures how well a service is delivered, compared to customer expectations. Businesses
that meet or exceed expectations are considered to have high service quality. Let's say you go to a fast food
restaurant for dinner, where you can reasonably expect to receive your food within five minutes of ordering. After you
get your drink and find a table, your order is called, minutes earlier than you had expected! You would probably
consider this to be high service quality. There are five dimensions that customers consider when assessing service
quality. Let's discuss these dimensions in a little more detail.