Service Management and

Marketing
Introduction
Gábor Réthi, PhD
The terminology of services
• Development of service sector
(agriculture – industry – service)

• Appreciation of the work of service providers

• Problem of measurability
Challenges of the XXI. century
• Outsourcing: Outsourcing is the business practice of hiring a party outside a company to perform
services and create goods that traditionally were performed in-house by the company's own employees
and staff. Outsourcing is a practice usually undertaken by companies as a cost-cutting measure. As such,
it can affect a wide range of jobs, ranging from customer support to manufacturing to the back office.
• Insourcing: Insourcing is the assignment of a project to a person or department within a company
rather than to a third party. Insourcing is the opposite of outsourcing.
• In practice, insourcing is used to describe a task or function that a company could have outsourced to a third
party. As a rule, insourcing provides companies with more control over decision-making and the ability to move
more quickly and precisely, especially if institutional knowledge factors into some elements of the job.
• Since the 1990s, companies have increasingly outsourced rather than insource, seeking cheaper labour in
developing nations. To the extent that employees’ time costs a company more than it would pay a third party to
do the same work, insourcing can produce higher expenses.
• The decision also depends on the best allocation of resources across a set of tasks as well. Employees who are
qualified to undertake a project if it is insourced might be more profitably deployed on other projects.
• Backsourcing: The process of bringing certain operations back in-house after they have been
outsourced as the outsourcing contracts expire or are terminated.
Service Industry vs.
Manufacturing
(number of employees, 1939-2014)
The change of different economic sector shares
(GDP, 1950-2008)
Proportions of economic sectors in GDP in selected
countries
Number of People in the service sector
Labour Force by Occupation
GDP Composition by Sector
World, largest listed companies by market
capitalisation, $bn (2006 vs. 2016)
The oldest company
in every country
*(that is still in business)
Primary sector

Secondary sector

Tertiary sector

Quaternary sector

Source: https://businessfinancing.co.uk/the-oldest-company-
in-almost-every-country/
Source: https://businessfinancing.co.uk/the-oldest-company-in-almost-
every-country/
Source: https://businessfinancing.co.uk/the-oldest-company-in-almost-
every-country/
Source: https://businessfinancing.co.uk/the-oldest-company-in-almost-
every-country/
Source: https://businessfinancing.co.uk/the-oldest-company-in-almost-
every-country/
Source: https://businessfinancing.co.uk/the-oldest-company-in-almost-
every-country/
Source: https://businessfinancing.co.uk/the-oldest-company-in-almost-
every-country/
Employed persons by sectors and sex in Hungary
(persons in thousands, 2008-2019)

Agriculture Industry Service Total Agriculture Industry Service Total Agriculture Industry Service Total
Year
Both sexes Male Female
2008 168,1 1 240,0 2 440,2 3 848,3 127,3 872,0 1 094,3 2 093,6 40,8 368,0 1 345,9 1 754,7
2009 174,9 1 167,4 2 405,6 3 747,8 129,6 831,1 1 064,4 2 025,0 45,3 336,3 1 341,2 1 722,8
2010 172,8 1 147,1 2 412,4 3 732,4 131,6 799,9 1 061,1 1 992,5 41,3 347,2 1 351,3 1 739,8
2011 184,6 1 161,2 2 413,2 3 759,0 137,8 814,1 1 069,1 2 021,0 46,8 347,1 1 344,1 1 738,0
2012 192,7 1 140,8 2 493,8 3 827,2 143,4 799,5 1 106,0 2 048,8 49,3 341,3 1 387,8 1 778,4
2013 184,6 1 165,1 2 543,1 3 892,8 137,7 822,1 1 143,9 2 103,7 46,9 343,0 1 399,1 1 789,0
2014 189,6 1 249,3 2 646,2 4 100,8 140,5 887,8 1 184,1 2 220,5 49,1 361,5 1 462,1 1 880,4
2015 203,2 1 273,2 2 727,3 4 210,5 153,8 907,2 1 218,9 2 283,5 49,4 366,0 1 508,4 1 927,0
2016 217,0 1 319,0 2 812,2 4 351,6 161,5 938,4 1 261,2 2 362,5 55,5 380,6 1 551,0 1 989,1
2017 220,0 1 389,8 2 811,5 4 421,4 164,5 990,6 1 262,2 2 417,3 55,5 399,3 1 549,3 2 004,1
2018 214,9 1 445,9 2 808,7 4 469,5 160,9 1 041,0 1 244,3 2 446,2 53,9 404,9 1 564,5 2 023,3
2019 210,7 1 444,1 2 857,3 4 512,1 154,1 1 039,9 1 285,7 2 479,7 56,6 404,2 1 571,7 2 032,4
Source: http://www.ksh.hu/docs/eng/xstadat/xstadat_long/h_qlf017.html
Defining services
•It is easier to define what is not service…
•Traditionally:
• Hotels, restaurants, services J
• Cinema, theatre
• Healthcare institutions
• Mindware services (technical, legal services, tax consultancy)
• Education
• Wholesale and retail trade
• Spedition
• Public services (electricity, water, gas etc.)
The specific features of services
•Intangibility : cannot be touched or felt (travel etc)
• Inseparability
• the usage of the service happens simultaneously with its production,
• Presence of customer
• Hybrid consumption
§Perishability – load redirection
•Variability - No services are identical
The definition of services
• „For the customer, services are any activities offered for sale
that provide valuable benefits or satisfaction; activities that he
cannot perform for himself or that he chooses not to perform
for himself” (Bessom, 1973)

• “A service is any intangible benefit, which is paid for directly or

indirectly, and which often includes a larger or smaller physical
or technical component” (Andresen, 1983)

• “A service is something which can be bought and sold but

which you cannot drop on your foot” (Gummeson, 1987)
The definition of services
“A service is an activity or series of activities of more or less
intangible nature that normally, but not necessarily, take
place in interactions between the customer and service
employees and/or physical resources or goods and/or
systems of the service provider, which are provided as
solutions to customer problems.”
(Grönroos, 1990)
Thank you for the kind attention!