Today, the United State economy is moving more and more towards a service based economy. What does this mean? It means that now companies are realizing they have to focus on service and many large, successful corporations are service oriented. What this means for companies that still sell tangible goods is that they now have to also focus on service, especially when it comes to pleasing the customer. Small businesses that offer iPod touch repair or iPhone repairs are just some of the examples of a service based U.S. economy. In the following paragraphs we will look at how companies have become service based and how they have had to change their business strategies to fit the needs of the changing market. There are four issues that companies have had to get around while switching to a more service based business model. The four issues that will be discussed in greater detail in the following paragraphs are intangibility, inconsistency, inseparability, and inventory.
When dealing with any type of service, there is the issue that it is not something people can see, touch or hears. So, when considering marketing tactics, companies have to attempt to make their service somewhat tangible. For example, people in the spa/hair salon industry use referrals, testimonials, and maybe they have their degrees from cosmetology school hanging around their station. These are all ways in which people in the service industry attempt to ease people’s minds, since they cannot really “try out” the service before it is already consumed.
Another issue with services can be consistency. Since people are at the root of the service industry and everyone does and says things a little bit differently, there is room for inconsistency. To combat this, companies try to create some things that are uniform. For example, people who work in fast food usually wear a uniform. This makes it seem like everything is consistent.
Thirdly, there is the issue that the service quality is automatically linked the customer/consumer and it cannot be separated. For example, a doctor can tell the patient he/she needs to lose weight and exercise more to lower cholesterol levels, but if the patient does not do those things, then the quality of care is compromised.
The last issue is the fact that the inventory is perishable. Going back to the hair salon for example, if a hairstylist does not have someone coming in for an appointment then the stylist will just have nothing to do until the next appointment. Unlike tangible products that can be put on sale if they are not selling at an exact time, services expire whether or not someone has used them.
Companies have a lot to think about when they enter into any industry in the United States today because there are so many issues that come with being a service based economy. Even if your company sells tangible goods there is still a service component to it that needs to be addressed. It will be interesting to see the new things companies come up with in terms of customer service, since we are entering a new age where the customer rules, yet companies also want to make a profit, so seeing how companies find that balance will be interesting.
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