1. The Service Sector: Supersectors and Ethical Considerations
Chapter 2
The Service Sector: Supersectors and Ethical Considerations

2. Chapter Objectives
• Describe the nine supersectors that comprise the service economy.
Identify the trends and concerns pertaining to the growth of the service economy.
Understand the reasons consumes are particularly vulnerable to ethical misconduct within the service sector.
Appreciate the types of ethical issues that often arise in the business sector.
Discuss the consequences of ethical misconduct.
Explain strategies that attempt to facilitate positive ethical behavior.
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3. Opening Vignette: Vail Resorts
Vail Resorts has recognized its responsibility to its guests and aggressively promotes skier safety.
Developed “Your Responsibility Code”: hopes its guests follow the code and share the responsibility of safety
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4. What is the Service Economy?
Education and
Health Services
Other Services
Financial
Activities
Wholesale and
Retail trade
Government
Service Economy
Service economy includes the “soft parts” of the economy consisting of nine industry supersectors. Fig 2.1 shows employment growth projections
Transportation
And Utilities
Information
Professional and
Business services
Leisure and
Hospitality
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5. Education and Health Services
Education subsector
Second largest employment industry
13.3 million jobs in
Schools
Colleges
Universities and training centers.
Health Care and Social Assistance subsector
Health services is the largest employment industry in private
14 million jobs in
Hospitals
Nursing care facilities
Physician’s offices
Home health care services
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6. Securities, Commodities, financial instruments.
Financial Activities
Banking and Insurance
e.g. Commercial banking
Savings institutions,
Credit Unions, and
Insurance Carriers
Securities, Commodities,
and other investments
manage the issuance,
purchase, and sale of
financial instruments.
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7. The Government
Publicly-owned establishments of federal, state, and local agencies that administer, oversee, and manage public programs
Includes public schools and public hospitals
Not-for-profit sector
Advocacy
Grantmaking
Civic Organizations
Federal Government
State and local government
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8. Information Subsector
Consist of establishments that produce and distribute information and cultural products, provide the means to distribute or transmit these products, and/or process data.
Publishing industries
Motion picture and sound recording industries
Broadcasting industries
Telecommunication industries
Internet service providers and web search portals
Data procession industries and information services industries.
Represents 2.6% of all employment
See E-services in Action
Game, Set, match.com
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9. Leisure and Hospitality
Arts, entertainment, and recreation subsector
More than 40% of the workforce has no formal education beyond high school
Hotels and other accommodation and food services subsector
22% of employees are between the ages of 16 to 19
2 out of 5 employees work part time
Jobs are plentiful
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10. Professional and Business
Includes a multitude of activities
Advertising and PR services
Legal advice and representation
Accounting and bookkeeping
Engineering and research services
Office administration and clerical services
Security and surveillance services
Cleaning and waste disposal services
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11. Transportation & Warehousing and Utilities
Transportation and
Warehousing
e.g. Transportation of
passengers and cargo,
warehousing and storage,
sightseeing transportation
Utilities
e.g. electricity, natural gas,
steam, water, and
sewage removal
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12. Wholesale and Retail Trade
Wholesale Trade subsector
Establishments that wholesale merchandise and provide services related to the sell of merchandise
2/3 work in the office and administrative support roles
Retail Trade subsector
Establishments that retail merchandise and provide services related to the sell of merchandise
84% consist of sales and administrative support positions
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13. Other Services “Catch-all”
A myriad of establishments that are in engaged in a variety of activities including
Equipment and machinery repair
Promoting or administering religious activities
Grantmaking
Advocacy
Drycleaning and laundry service
Personal care, death care, pet care
Photofinishing, temporary parking services, and dating services
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14. Service Sector Concerns
Materialismo Snobbery
Belief that without manufacturing there will be less for people to service and so more people available to do less work
Dichotomization of Wealth
The rich get richer and the poor get poor
Wages associated with service employment
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15. Ethical Considerations for Services Marketers
Consumer vulnerability in services marketing
Issues that create ethical conflict
Factors influencing ethical decision making
The effects of ethical misconduct
Strategies for controlling ethical behavior
Ethical vigilance: paying close attention to whether one’s actions are “right” or “wrong,” and if ethically “wrong,” asking why you are behaving in that manner.
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16. What are Ethics?
A branch of philosophy dealing with what is good and bad and with moral duty and obligation.
The principles of moral conduct that guide behavior in the business world.
See Sustainability and Services in Action
The Triple Bottom-Line
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17. The Opportunity for Ethical Misconduct in Services
Intangibility complicates the consumer’s ability to objectively evaluate the quality of service provided
Heterogeneity reflects the difficulty in standardization and quality control
Inseparability reflects the human element involved in the service delivery process
Greater detail in Ch 3
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18. Factors Contributing to Consumer Vulnerability
Few search attributes
Technical and specialized services
Time lapse between performance and evaluation
Sold without guarantees and warranties
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19. Factors Contributing to Consumer Vulnerability
Performed by boundary-spanning personnel
Accepted variability in performance
Outcome-based reward systems
Consumer participation in production
Boundary-spanning personnel – personnel who provide their services outside the firm’s physical factilities
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20. Issues that Create Ethical Conflict
Conflict of Interest
Organizational Relationships
Honesty
Fairness
Communication
Conflict of interest – the situation in which a service provider feels torn between the organization, the customer, and/or the service provider’s own personal interest.
Organizational relationship – working relationships formed between service providers and various role partners uch as customers, suppliers, peers, subordinates, supervisors, and others.
See Fig 2.3 Types of Ethical issues encountered by businesses
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21. The Effects of Ethical Misconduct
Personal Effects
Job-related tension
Frustration
Anxiety
Ineffective performance
Turnover intentions
Lower job satisfaction
Organizational Effects
Customer dissatisfaction
Unfavorable word-of-mouth publicity
Negative image for firm and industry
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22. Controlling Ethical Decision Making
Employee socialization
Standards of conduct
Corrective control
Leadership training
Service/product knowledge
Monitoring employee performance
Stress long-term customer relationships
Employee socialization – the process through which an individual adapts and comes to appreciate the values, norms, and required behavior patterns of an organization
Code of ethics – formal standards of conduct that assist in defining proper organizational behavior
Corrective control – the use of rewards and punishments to enforce a firm’s code of ethics
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23. Copyright © 2011 Cengage Learning.
All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of the publisher. Printed in the United States of America.
Copyright © 2011 Cengage Learning. 
©2011 Cengage Learning. All rights reserved.