What is the Service Sector?

Who doesn’t possess the knowledge or means to perform a certain activity, or who doesn’t not have the time or energy for it, can choose to let someone else do it. Get a haircut, take the train to work, go out eating in a restaurant, hire a babysitter, and so on. Services such as these constitute the majority of the economic activity in most Western countries. Companies are also increasingly using services of others, accountants, consultants and catering just to name a few.

The Growth

The service sector has slowly and relatively unnoticeably become more important than the industrial sector. This influential social development is also referred to as the ‘silent revolution’. We are, at present, living in a service economy, in a post-industrial economy and this development hasn’t stopped yet: the growth of wealth and job opportunity is mainly created by companies in the service sector.

Causes of the Growth

Most provided services carry in themselves a component of luxury, since it means hiring someone for an activity you, in most cases, can perform yourself.

An obvious cause for this development is the increase in wealth and spare time. A good indicator for this is the increasing sale of far, exotic trips. A higher income and more free time create the prerequisites to fulfill needs that are barely classifiable as ‘essential for life’.

The increasing number of options to fill our time, leads to the so-called ‘time paradox’: through efficient machinery, a shorter workweek and a longer lifespan we have more time than any of our predecessors, but we want to fill up that time with as many activities as possible.

The need to have activities performed by others forms the essence of the service sector, where a few general needs come up:

• Clarity
• Speed
• Reliability, and
• Low cost

When these four needs are combined, it becomes clear that it is all about effectiveness and efficiency.

Two additional explanations that can be used to explain the growth of especially business services, are the increasing complexity of society, which is the feeding ground for advisors and consultants, for example, and the increasing focus of companies on their core activity. This leads to the outsourcing of necessary supportive activities, such as maintenance and research.

The Result: Service Marketing

All this leads to a more intense competition among service providers, which in turn has led to the rise of marketing in the service sector.