I was recently asked what I believe are the main reasons the service sector is growing in its share of all major economies of the world. First, some baseline semantics. The definition of a product is more or less obvious, while some services are billed as products (e.g., financial products), let’s just say that a product is a thing that you can hold, wear, drive, eat, drink, put in a bag, give as a gift, etc. Intrinsically these are all tangible goods. Which, to me, is the key differentiator, bottom line. Services are intangible.
In fact, one of my favorite business books, which I reference time and again, is Harry Beckwith’s “Selling the Invisible”, with the invisible being the service. The services sector is growing and it is not only larger than any other in most developed nations, including an estimated 68% of the economy here in the United States, and a staggering 95% in the Cayman Islands, but with increasing numbers of products becoming seemingly indistinguishable commodities, services are being bundled or otherwise offered to augment products.
To elevate this to a global perspective, let’s examine this in the broader picture of a holistic marketing model, as underscored by the following passage from a marketing text authored by Kotler & Keller: “The new competition is not between what companies produce in their factories, but what they add to their factory output in the form of packaging, services, advertising, customer advice, financing, delivery arrangements, warehousing, and other things that people value.”
Posted by: Colin Mangham