Services Industries and Building Economic Growth

Introduction

Any economy is driven by the returns gained from the exchange of goods and services. Both goods and services are contributors to the revenue in an economy. Trade-in goods are slightly different from trade in services. Many scholars and analysts continue to support the idea that; trade in goods is a substantial contributor to the revenues raised by economies. On the other hand, the contributions of service sectors cannot be ignored. Service sectors have witnessed significant growth in recent years (Kinkel, Kirner, Armbruster, and Jäger, 2011). Services sectors are largely contributing to the growth of economies in the world.

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Therefore, the service sector has become a crucial topic of discussion because it is becoming highly significant in the global economies. Some countries are even getting higher revenues from service sectors when compared to what they are getting from goods (Riedl, 2010). Such service sectors include the information and communication sector. Service sectors are the main support pillars of the goods sector, and without them, the growth in the real goods sector could not be witnessed (Ettlie and Rosenthal, 2011). Though the service sector is faced with a number of setbacks, service sectors will remain significant contributors to economic growth and development (Auguste, Harmon, and Pandit, 2006). This paper discusses the relevance of service sectors in the economy.

Importance of developing service offering in business organizations

There is a need for organizations to improve the quality of services delivered to customers. A service is a perfect complement and supplement of business activities—services help in crafting an engaging customer to understand what the business firm is offering. Service offering helps in creating value in the minds of consumers. Customers continue to advocate for assurances in products for which firms are offering. Service is the best solution for the needs and concerns of customers concerning company offerings (Duchessi, 2002).

There have been many shifts in the economy in recent times, and this calls for the globalization of business activities to realize big profits. The globalization of businesses is aided by the growth in information technology. Technology is the main pillar of the service sector. Today, businesses in the globalized economy face more challenges than ever before. A lot of these challenges, for instance, accidents and environmental considerations, among others, can only be mitigated by engaging the services sector (Nissana, Galindob, and Me’ndezc, 2011).

Services present tremendously high-profit potential for any business firm, more so to the firms that deal in manufacturing.

Manufacturing organizations need to develop stronger service strategies to exploit their full potential. Services can complement the sales activities in manufacturing firms. Increasing the rate of service offering will help improve business outcomes and the competitive advantage of production and manufacturing organizations (Oliva and Kallenberg, 2003).

Ways through which organizations design and build service offers

Johnston, Dainty, and Wilkinson (2009) observe that delivering quality services improves the level of customer satisfaction. Services augment business operations and functions in non-service oriented business companies. The provision of services involves an interactive relationship between the companies which offer services and customers, who are considered as clients (Rust and Huang, 2012). Building and maintaining customer relationship are processes which are best described in relationship marketing. For service firms to remain relevant and withstand the competition in the market, they must take part in service activities. This will assure them of maintaining their customers as well as enticing other customers to their side. Some firms will prefer to maintain the customers that they have rather than rolling out ambitious programs of attracting new customers (Oke, 2007).

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One way through which firms ensure that they maintain their customers is by categorizing the services which are offered. Services, which are given on a continuous basis, are considered membership services. Membership services are preferred because they give the organization stable customers. The company works hard to develop these membership services because they provide it with an assurance of having many customers. However, it is quite challenging to build this relationship with customers. Once it is built, it becomes quite easy to sustain the relationship. There are also services that involve discrete transactions, for example, public service transportation and movie theatre. With these services, membership cannot be easily built. However, these services can only be transformed into membership through the use of marketing tools such as bulk selling of services or giving unique benefits or offers to customers who opt to register with a firm. A good example is the loyal programs which are offered by airline firms and hotels (Lamb, Hair and McDaniel, 2008).

Each service firm strives to make its services appear unique and better as compared to the services of other firms. There are three key ways through which firms ensure that they maintain and attract new customers. The first approach centers on pricing, where firms use prices as incentives for maintaining and enticing new customers. The firm sets its prices relative to the prices of its competitors. The prices are set relatively lower. Service firms are also opting to build social bonds with customers. This helps them to understand their customers and their needs, and thus, adjust their services to satisfy customers’ needs. Firms also opt to build structural bonds. These are additional services that are offered on top of the main services. The company offers services that are not provided by its competitors (Lamb, Hair, and McDaniel, 2008).

Building service offering in Barclays UK and Virgin Atlanta Airways

The banking industry is one of the biggest industries in the services sector in the world. The United Kingdom Barclays Bank is among the renowned banks in the world for its activities. It has established innovative strategies globally. The bank has done well in improving services in the banking market. Being a large bank, Barclays UK is remarkably innovative. For example, the bank was among the pioneers who established information technology in service delivery to its customers. The bank invests a lot of finance in developing automated services for its customers. Barclays was the first bank to develop automated teller machines for its customers globally. The company also leads in the innovation of cards to ease transactions by its customers.

Barclays is an exceptionally expansive bank and is further expanding its services. It is one of the banks with a wide range of products. These banking services are tailor-made to address the diversified financial needs of their customers. The bank does provide not only financial services but also other complementary services, for example, risk management services to their customers. Their customers have no reason to move out and seek these services from other service firms like the insurance firms as these services are provided by the bank (Sureh and Paul, 2010). Barclays has also incorporated aspects of e-commerce in the business. The bank has developed online banking, which has reduced the number of transactions. The number of banking transactions made has increased significantly by the use of this service (Sureh and Paul, 2010).

Virgin Atlantic Airways is one of the world’s most renowned airways company. Virgin is operating in the airline industry, and there are many competitors in the industry because there are many giant companies in the industry. Virgin has been focusing on how to improve the services are delivered to customers. Virgin highly embraces the principle of providing services at a lower cost. Virgin works on upgrading their services by increasing the level of comfort in their planes by installing larger seats, improving the customer care services, increasing amenities in the plane, among others. The company ensures that it maintains low charges even for the improved services (Porter, 2010).

Comparison and contrast of service offering in Barclays UK and Virgin Atlanta Airways

Each of the two companies – Barclays UK and Virgin Atlanta Airways, are service-oriented companies operating in intensely competitive service industries. Both companies have strategies of improving service delivery to their customers so that they can continue to make gains in business. All companies work on diversifying and improving their services so that they can attain full affection, hence the attention of their customers. Barclays focuses on service improvement through employing information technology. This is similar to Virgin, which applies IT to improve services. The major difference between the two companies is that Virgin emphasizes on reduced cost of services.

Reference List

Auguste, BG, Harmon, EP and Pandit, V 2006, ”The right service strategies for product companies”. McKinsey Quarterly, 2006, Issue 1.

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Duchessi, P 2002, crafting customer value: The art and science. Purdue Univ. Press. West Lafayette, Ind. Print.

Ettlie, J E & Rosenthal, S R 2011, “Service versus Manufacturing Innovation”, Journal of Production Innovation Management, Vol. 28, pp. 285–299.

Johnston, S, Dainty, A and Wilkinson 2009, “Integrating products and services through life: an aerospace experience”, International Journal of Operations & Production Management, Vol. 29 (5), pp.520 – 538.

Kinkel, S, Kirner, E, Armbruster, H and Jäger, A 2011, Relevance and innovation of production-related services in manufacturing industry. International Journal of Technology Management, 55(3), 263-273.

Lamb, C W, Hair, J F & McDaniel, C D, 2008, Marketing. Thomson/South-Western. Mason, OH. Print.

Nissana, E., Galindob, M and Me´ndezc, M. T., 2011 “The future of services in a globalized economy”, The Service Industries Journal, Vol. 31(1), 59–78.

Oke, A., 2007, “Innovation types and innovation management practices in service companies”, International Journal of Operations & Production Management, Vol. 27(6), pp.564 – 587.

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Oliva, R., and Kallenberg, R., 2003,”Managing the transition from products to services”, International Journal of Service Industry Management, Vol. 14 (2), pp.160 – 172.

Porter, D., 2010, Frommer’s London 2011. Frommers. S.l. New York. Print.

Riedl, A 2010, “Location factors of FDI and the growing services economy1: Evidence for transition countries”. Economics of Transition, Vol. 18(4), 741–761.

Rust, R T and Huang, Ming-Hui 2012, “Optimizing Service Productivity”, Journal of Marketing, Vol. 76, 47–66.

Sureh, P & Paul, J 2010, Management of Banking and Financial Services. Dorling Kindersley. New Delhi. Print.

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