We have always had service industries, and indeed there are numerous biblical references to services as diverse as inn keeping, money lending and market trading. Over time, the service sector has grown in volume andin the importance attributed to it. According to Baker J.M et al, The Marketing Book 5th Ed, (2003), early economists saw services as being totally unproductive, adding nothing of value to an economy. He quotes Adam Smith as having included the efforts of intermediaries, doctors, lawyers and the armed forces among those who were ‘unproductive of any value’ (Smith, 1977) and this remained the dominant attitude towards services until the latter part of the nineteenth century. Economists now recognize that tangible products may not exist at all without a series of services being performed in order to produce them and to make them available to consumers. So an agent distributing agricultural produce performs as valuable a task as the farmer. Without the provision of transport and intermediary services, agricultural products produced in areas of surplus would be of little value. Services in recent years have had a major impact on national economies and many service industries have facilitated improved productivity elsewhere in the manufacturing, transportation and agricultural sectors. In this assignment we shall attempt to account for the account for the explosion and importance of the service industry in Zambia, its major characteristics and which of those service characteristics are likely to have an impact for each marketing mix element.
In order for us to effectively account for the explosion of the service industry in Zambia we will define a service, Lovelock and Wright (2001), define a service as an act or performance offered by one party to another. Although the process may be tied to a physical product, the performance is essentially intangible and does not normally result in ownership of any of the factors of production. The same authors alternatively define services as economic activities that create value and provide benefits for customers at specific times and places, as a result of bringing about a desired change in—or on behalf of-—the recipient of the service. 1.1Classification of the Service Industry
Business Services Finance
Communication Health & Social services
Distribution Recreation & sports
Environment Others (Utilities)
2.0IMPORTANCE OF THE SERVICE INDUSTRY TO THE ZAMBIAN ECONOMY Zambia is one of Sub-Saharan Africa's most highly urbanized countries. About one-half of the country's 13 million people are concentrated in a few urban zones strung along the major transportation corridors, while rural areas are under-populated. Unemployment and underemployment are serious problems. National GDP has actually doubled since independence, but due in large part to high birth rates and AIDS per capita annual incomes are currently at about two-thirds of their levels at independence For the first time since 1989 Zambia's economic growth reached the 6%-7% mark(in 2007) needed to reduce poverty significantly. Copper output has increased steadily since 2004, due to higher copper prices and the opening of new mines. The maize harvest was again good in 2005, helping boost GDP and agricultural exports. Cooperation continues with international bodies on programs to reduce poverty, including a new lending arrangement with the IMF in the second quarter of 2004. A tighter monetary policy will help cut inflation, but Zambia still has a serious problem with high public debt.
Firstly, there is little doubt that the services sector has become a dominant force in developing economies, accounting for about three-quarters of all employment in the USA, UK, Canada and Australia. There appears to be a close correlation between the level of...