Definition: A service industry is an economic segment that provides certain intangible activity that fulfills a particular need. Companies within this industry perform tasks that are useful to their customers.
What Does Service Industry Mean?
The service industry is very wide in its nature. It covers a large range of activities that add value to businesses and individuals but the output is not a physical product, instead this industry enhances, maintains, repairs, shapes and perform different alterations to physical items. It also covers activities such as transportation, medical services, education, banking, insurance, waste disposal, telecommunications services and other complex activities that are crucial to a society’s proper functioning.
This industry is said to produce more than 70% of the jobs of most developed economies and also represents a large part of these country’s gross domestic products. Services are also classified as the tertiary industry, where they are separated as profit and non-profit depending on the nature of the organization’s activities. Highly developed economies regularly shift the largest portion of its economies towards the service industry, as the economic system becomes more professional and complex. The primary and secondary segments become smaller in proportion.
Example
Lotus Communications is a company that provides massive text messaging campaign services for businesses. Their goal is to incorporate text messaging as a marketing tool that companies can exploit as consumers are more and more attached to their smartphone devices. Since this is an intangible activity that doesn’t produces a physical item the company is considered to be one of the tertiary sector, meaning the service industry.
The currently employ 25 people and produce revenues of $5,600,000 per year. They have grown rapidly since text messaging advertisement is considered to be a highly successful marketing tool for companies offering products online. A recent report issued by one of the country’s top digital magazines awarded Lotus as one of the pioneers in the text messaging advertisement industry.
