CH.12 Services Services generate more than 2/3 of GDP in developed countries, compared to ½ in developing countries.

Three Types of Services Service 1: Consumer Services Principal purpose is to provide services to individual consumers who desire them and can afford to pay for them. Constitutes nearly ½ of all jobs in the U.S. Subdivided into four main types: Retail and Wholesale Services Education Services Health and Social Services Leisure and Hospitality

Three Types of Services Service 2: Business Services Principal purpose is to facilitate other businesses. Constitutes ¼ of all jobs in the U.S. Subdivided into three main types: Professional Services Financial Services Transportation Services Three Types of Services

Three Types of Services Service 3: Public Services Purpose is to provide security and protection for citizens and businesses. Constitutes about 5% of all jobs in the U.S. Workers divided among various levels of government. Federal Government: 1/6 of public sector employees State Government: ¼ of public sector employees Local Government: 3/5 of public sector employees Three Types of Services

Changes in Services Rising and Falling Service Employment Service sector has seen nearly all the growth in employment worldwide. Service sector has been negatively impacted by the recession. Change in Number of Employees Within business services, jobs expanded most rapidly in professional services- engineering, management, and law. Within consumer services, fastest increase has been in provision of health care

Where Did Services Originate? RURAL SETTLEMENTS URBAN SETTLEMENTS Services in early rural settlements=met public needs Examples = burial of the dead, religious centers, manufacturing centers Early public services probably followed religious activities Early business services to distribute and store food Services in early urban settlements=ancient cities Earliest urban settlements - Athens, Rome Services in medieval cities Largest settlements were in Asia European cities developed with feudalism

CHARACTERISTICS OF RURAL SETTLEMENTS Half of the world’s population lives in rural settlements Two types Type 1: Clustered Circular or linear In Colonial America Type 2: Dispersed In the United States In Great Britain Enclosure movement

CHARACTERISTICS OF URBAN SETTLEMENTS Large size High density Social diversity High percentage of people in cities Global cities or world cities are at the top of the urban settlement hierarchy. Center of the flow of information and capital in the global economy. REMEMBER THIS TERM! Urbanization: An increase in the percentage of the number of people living in urban settlements.

What location should you open a new shop? To help with this question, let’s use the CENTRAL PLACE THEORY. Geographer Walter Christaller proposed the concept of a central place in the 1930s. What is the CENTRAL PLACE THEORY? It helps explain why consumers services follow a regular pattern based on size of settlements, with larger settlements offering not only more consumer services but also more specialized ones. The model uses hexagons.

STEP 1: LOCATE THE CENTRAL PLACE A central place is a market center for the exchange of goods and services by people attracted from the surrounding area. Its is centrally located to maximize accessibility. A market area, or hinterland, is the area surrounding a service from which customers are attracted.

STEP 2: IDENTIFY RANGE AND THESHOLD The RANGE of a service is the maximum distance people are willing to travel to use it. People travel short distances for everyday services. e.g. groceries and movie rentals People travel greater distances for services offered exclusively in specific places. e.g. concerts and professional sporting events The THRESHOLD of a service is the minimum number of people needed to support the service. Service providers determine the suitability of a service center by overlaying the range of potential customers to its threshold.

STEP 3: ARE THE GOODS OR SERVICES HIGH-ORDER OR LOW-ORDER? High-order goods: Specialized items such as automobiles, furniture, fine jewelry, and household appliances that are bought less often. Many businesses selling these items cannot survive in areas where the population is small. Locate in large cities that can serve a large population in the surrounding hinterland. Low-order goods: Items that are replenished frequently such as food and other routine household items. Groceries, newspapers, drugstores, fast food

STEP4: WHAT IS YOUR MARKET AREA LEVEL? Market areas across a developed country would be shaped as a series of hexagons of various sizes, unless interrupted by physical features. Four different levels of market area exist: Hamlet (smallest) Village Town City (largest)

In North Dakota, larger settlements are fewer and farther apart, whereas smaller settlements are more numerous and closer together.

STEP 5: RANK-SIZE VS. PRIMATE CITY Rank-size rule: The country’s nth- largest settlement is 1/n the population of the largest settlement. Plotting populations on logarithmic paper produces a straight line. EXAMPLE: US IF NOT A STRAIGHT LINE=PRIMATE CITY! Primate city: A city more than twice the population of the second-ranking settlement. EXAMPLE: MEXICO

STEP 6: HOW MUCH MONEY WILL I MAKE? 1. Compute the Range Survey local residents about willingness to travel a specific amount of time to the potential site of a new store. 2. Compute the Threshold Identify how many patrons are needed to meet expenses. 3. Draw the Market Area Draw the range around potential location of new store, then identify whether or not the threshold is met within that radius.

Gravity Model-predicts that the optimal location of a service is directly related to the number of people in the area and inversely related the distance people must travel to access it.