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356 PART 5 SHAPING THE MARKET OFFERINGS

Service Industries Are Everywhere

The government sector, with its courts, employment services, hospitals, loan agencies, military
services, police and fire departments, postal service, regulatory agencies, and schools, is in the
service business. The private nonprofit sector—museums, charities, churches, colleges, foundations,
and hospitals—is in the service business. A good part of the business sector, with its airlines, banks,
hotels, insurance companies, law firms, management consulting firms, medical practices, motion
picture companies, plumbing repair companies, and real estate firms, is in the service business.
Many workers in the manufacturing sector, such as computer operators, accountants, and legal staff,
are really service providers. In fact, they make up a “service factory” providing services to the
“goods factory.” And those in the retail sector, such as cashiers, clerks, salespeople, and customer
service representatives, are also providing a service.
A service is any act or performance one party can offer to another that is essentially intangible
and does not result in the ownership of anything. Its production may or may not be tied to a phys-
ical product. Increasingly, manufacturers, distributors, and retailers are providing value-added
services, or simply excellent customer service, to differentiate themselves. Many pure service firms
are now using the Internet to reach customers; some are purely online. Monster.com’s Webby-
award-winning site offers online career advice and employment recruiting. Done right, improve-
ments or innovations in customer service can have a big payoff, as Zipcar found.

Zipcar Car sharing started in Europe as a means to extend public transportation. In

the United States the appeal of Zipcar, the market leader and pioneer, is both environmental
and economic.With a $50 membership fee and rates that total less than $100 a day—which
includes gas, insurance, and parking—a typical family could save $3,000 to $4,000 a year
by substituting Zipcar use for car ownership. Zipcar’s fleet includes all types of popular
Zipcar offers its fast-growing cus- models—BMWs, Volvos, pickup trucks, and even MINI Coopers and the Toyota Prius hybrid—and the
tomer base a practical, environ- firm estimates that every car it adds keeps up to 20 private cars off the road. Consumers—and an
mentally friendly alternative to car
increasing number of universities and businesses—book online and use a sophisticated reservation sys-
ownership.
tem to reserve a specific car in their neighborhood. There are a
number of rules for car care (such as no smoking) and logistics
(such as calling to extend a reservation if running late). As CEO
Scott Griffith states, “Our business model depends on the kind-
ness of others.” To help increase awareness, Zipcar slaps its
logo on the side of all but the high-end luxury models. Unusual
marketing stunts such as a contest to guess how many
Swedish meatballs had been stuffed into a MINI Cooper parked
in an IKEA parking lot also help to spread the word. Targeting
major cities and college towns, the company is growing about
30 percent a year. 5

Categories of Service Mix

The service component can be a minor or a major part of
the total offering.We distinguish five categories of offerings:
1. Pure tangible good—a tangible good such as soap,
toothpaste, or salt with no accompanying services.
2. Tangible good with accompanying services—a tangible
good, like a car, computer, or cell phone, accompanied
by one or more services. Typically, the more technologi-
cally advanced the product, the greater the need for
high-quality supporting services.
3. Hybrid—an offering, like a restaurant meal, of equal
parts goods and services. People patronize restaurants
for both the food and its preparation.