Chapter 12: Services

1. Chapter 12: Services The Cultural Landscape: An Introduction to Human Geography

2. Services • Service • Definition—Any activity that fulfills a human want or need and returns money to those who provide it. • Services are located in settlements • Settlement—A permanent collection of buildings where people reside, work, and obtain services. • The optimal location of an industry requires balancing a number of site and situation factors, but ultimately the optimal location is simply near its customers. • Industries can locate in remote areas, confident that workers, water, and highways will be brought to the location if necessary. The distribution of services must follow to a large extent the distribution of where people live

3. Services • Location of Services • If services were just located based on where people lived, then China and India would have the most, rather than US and other MDCs. • Services cluster in MDCs b/c those more able to buy services live there. • In terms of globalization, the provision of services is increasingly uniform from one urban settlement to another, especially in MDCs. Every town or city of a certain size has certain restaurants or stores (i.e. McDonald’s) • In terms of local diversity, a settlement may offer a service such as a medical clinic, an advertising agency, or a film studio not found in other settlements of comparable size. And every place—MDCs and LDCs alike—offers distinctive services that attract tourists and visitors.

4. Percentage of GDP from Services, 2005 Figure 12-1

5. Where Did Services Originate? • Three types of services • Consumer services • Purpose is to provide services to individual consumers who desire them and can afford to pay for them. • Around 44% of all jobs in the US are of this type. • Four main types: • Retail—About 15% of all US jobs. Department stores, grocers, motor vehicle sales, and wholesalers. • Education Services—About 10% of all US jobs. 2/3 of educators are employed in public schools and 1/3 in private schools. • Health Services—About 12% of all US jobs • Leisure Services—About 10% of all US jobs. Around 70% are restaurants or bars; the other 30% is lodging and entertainment.

6. Three Types of Services (cont’d) • Business Services • Around 24% of all jobs in the US • Purpose is to facilitate other businesses • Three Main Types: • Financial Services—About 6% of all US jobs. Often called FIRE, an acronym for finance, insurance, and real estate. • Professional Services—about 12% of all US jobs. Jobs include law, management, accounting, architecture, engineering, design. • Transportation and Information Services—About 6% of all US jobs. Jobs include trucking, publishing, broadcasting, and water and electricity companies.

7. Three Types of Services (cont’d) • Public Services • Purpose is to provide security and protection for citizens and businesses. • About 17% of all US jobs. 9% of public school employees are excluded from this total and counted under education (consumer) services. • Excluding educators, ¼ of public-sector employees work for the federal government, ¼ for one of the 50 state governments, and one-half for one of the tens of thousands local governments.

8. Employment Change in the United States by Sector All of the growth in employment since 1970 has been in the tertiary sectors, whereas employment has remained unchanged in the primary and secondary sectors. Within the tertiary sector, the greatest increase has occurred in professional services. Figure 12-2

9. 2008 Recession • Service sector triggered this economic recession. Principal contributors to the recession were some of the practices involved in financial service and real estate services including: • Rapid rise in real estate prices, in which speculators acquired property for purpose of reselling at even higher prices. • Poor judgment in lending by financial institutions—offered mortgages to individuals who were unable to repay them. • Decisions by gov’t agencies to reduce or eliminate regulation of the practices of financial institutions. • Financial institutions wouldn’t make loans once recession began • At a global scale, the 2008 recession resulted in an absolute decline in world GDP. At a regional scale, MDCs were more affected by the global recession.

10. The countries least affected by recession were the poorest countries of sub-Saharan Africa. • At a local scale, the recession hit the communities in the Midwest the hardest. These were the industrial centers where bankrupt carmakers Chrysler and GM were based. • Most of the hardest-hit communities were in the South and West, regions that had been the most prosperous. These communities were especially affected by declines in services, especially real estate and finance.

12. Where Did Services Originate? • Services in early rural settlements • Early consumer services met societal needs • Exs: burial of the dead, religious centers, manufacturing centers • Early public services • Initially followed religious practices. Later, for protection, some members became soldiers, stationed in a settlement. • Early business services to distribute and store food • Food was supplied by hunting and gathering. At some point, someone probably wondered, why not bring in extra food for hard times, such as drought or conflict? This perhaps was the origin of transportation services.

13. Where Did Services Originate? • Services in early urban settlements • Services in ancient cities • Earliest urban settlements (e.g., Ur), Athens, Rome • Ancient Athens—settlements were trading centers for the thousands of islands dotting the Aegean Sea and the eastern Mediterranean. Also provided gov’t and military protection. They were organized into city-states, which were independent self-governing communities. • Ancient Rome—Much of Europe, North Africa, and SW Asia was under Roman rule. Settlements were established as centers of administrative, military, as well as retail and other consumer services. Roman empire fell in 5th century & urban settlements declined after.

14. Where Did Services Originate? • Services in early urban settlements • Services in Medieval Cities • Urban life began to revive in Europe in 11th century as feudal lords established new urban settlements. • The lord obtained people to defend his territory at less cost than maintaining a standing army. For their part, urban residents preferred periodic military service to the burden faced by rural serfs, who farmed the lord’s land and could keep only a small portion of their own agricultural output. • When serfs won freedom, surplus from the countryside was brought into the city for sale, and markets were expanded through trade with other free cities. • Until the Industrial Revolution, most of the world’s largest cities were in Asia, not Europe.

15. Medieval City: Brugge, Belgium • Beginning in the 12th century, Brugge was the most important port in NW Europe and a major center for manufacturing wool. • However, the city’s importance declined during the 15th century.

16. Typical of medieval towns, the center of Brugge is dominated by squares surrounded by public buildings, churches, and markets. This photo is the Grote Market.

17. Medieval City: Carcassonne, France—Most medieval cities were surrounded by walls for protection. The walls have been demolished in most places, but they still stand around the medieval center of this city.

18. Where Are Contemporary Services Located? • Services in rural settlements • Half of the world’s population lives in rural settlements • Two types • Clustered rural settlements • These are places where a number of families live in close proximity to each other. In common language, such a settlement is called a hamlet or a village. • Homes, public buildings, and fields in a clustered rural settlement are arranged according to local cultural and physical characteristics, and they are often arranged in circular or linear patterns.

19. Rural Settlement Patterns (Left) Circular rural settlement once common in Germany. (Center) Linear rural settlement called “long-lot” which gives everyone access to the river. (Right) Long-lot rural settlement established by French settlers in Quebec, especially along the St. Lawrence River. Figure 12-10

20. Kraal circular-shaped village, created by the Ovambo people in northern Namibia.

21. Quebec long-lot rural settlement. Along the St. Lawrence River, farm fields were traditionally arranged in narrow strips.

22. Clustered Settlements in Colonial America • New England colonists built clustered settlements centered on an open area called a common. • Settlers grouped their homes and public buildings, such as the church and school, around the common. • In addition to their houses, each settler had a home lot of 1-5 acres, which contained a barn, garden, and livestock.

23. Vermont, a New England clustered settlement—Public buildings are grouped around a common.

24. Dispersed Rural Settlements • Outside of New England, dispersed settlements were more common in the American colonies. • The Middle Atlantic colonies were settled by more heterogeneous groups than those in New England. • They came from Germany, Ireland, Scotland, and Sweden • The clustered rural settlement pattern worked when the population was low, but settlements had no spare land to meet the population increase through NIR and net in-migration. • Shortage of land eventually forced immigrants and children to claim farmland on the frontier. • In addition, the cultural bonds that had created clustered rural settlements were weakened.

25. Where Are Contemporary Services Located? • Services in urban settlements • The population of urban settlements exceeded that of rural settlements for the first time in human history in 2008. • Louis Wirth argued during the 1930s that an urban dweller follows a different way of life than does a rural dweller. • He defined a city as a permanent settlement with 3 characteristics—large size, high population density, and socially heterogeneous people. • These characteristics produced differences in the social behavior of urban and rural residents.

26. Percentage of Population Living in Urban Settlements Figure 12-14

27. Increasing Percentage of People in Cities • Urbanization • Definition—The process by which the population of urban settlements grows. It has two dimensions—an increase in the number of people living in cities and an increase in the percentage of people living in cities. • A large percentage of people living in urban settlements reflects a country’s level of development. • In MDCs, about ¾ of people live in urban areas, compared to about 2/5 in LDCs. The major exception to the global pattern is Latin America, where percentage of urban residents is similar to MDCs. • MDCs can now be said to have fully urbanized b/c nearly everyone interested in migrating from rural areas has already done so. The % of people in LDCs living in cities has risen rapidly b/c many people have migrated from rural areas in search of manufacturing jobs.

28. Urban Settlements With Populations of at Least 3 Million Figure 12-15

29. Though the % of people living in urban settlements is greater in MDCs, most of the largest urban settlements are now located in LDCs.

30. Rapid growth of urban settlements in LDCs reflects increasing overall population plus migration from rural areas.

31. Why Are Consumer Services Distributed in a Regular Pattern? • Central place theory • First proposed by Walter Christaller (1930s) • Selecting the right location for a new shop is probably the single most important factor in the profitability of a consumer service. • This theory helps to explain how the most profitable location can be identified. • A central place is a market center for the exchange of goods and services by people attracted from the surrounding area. • Central places compete against each other to serve as markets for goods and services for the surrounding region. According to this theory, this competition creates a regular pattern of settlements.

32. Market Area of Service • The area surrounding a service from which customers are attracted is the market area or hinterland. • To establish the market area, a circle is drawn around the node of service on a map. The territory inside the circle is its market area. • The closer to the periphery of the circle, the greater is the percentage of consumers who will choose to obtain services from other nodes. • The entire US can be divided into 171 functional regions centered around commuting hubs, which is called daily urban systems. • To represent market areas in central place theory, geographers draw hexagons around settlements. • Like squares, hexagons nest without gaps. Although all points are not the same distance from the center, like a circle, the variation is less than with a square.

33. Daily Urban Systems--Map is delineated by functional ties to the nearest metropolitan area. Dividing the country into these “daily urban systems” demonstrates that everyone in the US has access to services in at least one large settlement.

34. Central Place Theory Problems w/ Circles—They are equidistant from center to edge, but they overlap or leave gaps. An arrangement of cirlces that leaves gaps indicates that people living in the gaps are outside the makret area of any service, which is obviously not true. Overlapping circles are also unsatisfactory, for one service or another will be closer, and people will tend to frequent it. Problems w/ Squares—Their sides are not equidistant, the distance from the center varies among points along the square. Hexagon Compromise—Hexagons offer a compromise between the geometric properties of circles and squares.

35. Size of Market Area • To determine the extent of a market area, geographers need 2 pieces of information about a service—its range & threshold. • Range of a Service • How far are you willing to drive for a pizza? To see a doctor? • The range is the maximum distance people are willing to travel to use a service. The range is the radius of the circle (or hexagon) drawn to delineate a service’s market area. • People are willing to go only a short distance for everyday consumer services, like groceries. But they will travel a long distance for other services, such as a concert or a ball game. Thus, a convenience store has a small range, whereas an arena has a large range. • Since most people think of distance in terms of time, then irregularly shaped circles must be drawn to acknowledge travel time.

36. Market Areas, Range, and Threshold for Kroger Supermarkets Dayton, Ohio—The radius of each irregular circle is the range for each store. The median radius for Kroger supermarkets in Dayton is approximately 1.2 miles.

37. Threshold of a Service • This is the minimum number of people needed to support the service. Every enterprise has a minimum number of customers required to generate enough sales to make a profit. • Once the range is determined, a service provider must determine whether a location is suitable by counting the potential customers inside the irregularly shaped circle. • The median threshold needed to support a Kroger supermarket in Dayton is about 30,000 people. • How potential consumers inside the range are counted depends on the product. Convenience stores and fast food appeal to nearly everyone, whereas other goods and services appeal primarily to certain consumer groups. • Developers of shopping malls, department stores, and large supermarkets may count only higher-income people, perhaps those w/ annual incomes greater than $50k b/c they are likely to spend more and purchase items that carry higher profit margins for the retailer.

38. Why Are Consumer Services Distributed in a Regular Pattern? • Market-area analysis • Retailers of consumer services use market-area analysis to determine if locating in the area would be profitable and where the best location would be w/in the market area. • Profitability of a Location • Compute the range—Survey local residents and determine that people are generally willing to travel up to 15 minutes for a convenience store. • Compute the threshold—Suppose a convenience store must sell at least $10k worth of goods per week to make a profit, and the average customer spends $2 a week. The store would need at least 5,000 customers each week to break even at $10,000. • Draw the market area—Draw an irregular shaped circle w/ a 15 min travel radius, adjusting the boundaries to account for any competitors. If there are more than 5,000 people w/in the radius, then the threshold may be high enough to justify constructing the store.

39. Market-Area Analysis (cont’d) • Optimal Location Within a Market • If the threshold and range justify the service, the next geographic question is: Where should the service be located w/in the market area to maximize profit. The best location is one that minimizes the distance to the service for the largest number of people. • Best Location in a Linear Settlement • Suppose you’re trying to establish a new pizza restaurant. • To find a location that minimizes the distance your van must travel to deliver to all the potential customers, you should locate the pizza business at the median, which would be the middle point. • What if a different number of customers live in each block of city? Geographers have adopted the gravity model, which predicts that the optimal location of a service is directly related to the number of people in the area and inversely related to the distance people must travel to access it.

40. (Top)—Optimal location is between 5th-6th streets, the median location. There would be 3 houses located to the west and 3 to the east. (Bottom)—Best location for a pizza-delivery service in a linear settlement with 99 families. Numbers in each apartment building represent families at each location. The median location is the middle observation among these 99 families, the place where 49 families live to the west and 49 live to the east.

41. Gravity Model—Consumer Behavior reflects 2 patterns: • More people living in a place leads to more potential customers for a service. • The farther people are from a service, the less likely they are to use it. • Best Location in a Nonlinear Settlement • Most settlements are more complex than a single main street. Geographers still use the gravity model to find the best location, following these steps: • Within a range of the service, identify where every potential user lives, Measure the distance from the possible site of the new service to every potential user, Divide each potential user by the distance to the potential site for the service, Sum all of the results of potential users divided by distances, Select a 4 other possible locations for the service and repeat the previous steps, Compare the results for all possible sites and the site with the highest score has the highest potential number of users and is therefore the optimal location.

42. Hierarchy of services and settlements • Small settlements are limited to services w/ small thresholds • We spend as little time and effort as possible in obtaining consumer services and thus go to the nearest place that fulfills our needs. • We travel great distances only if the price is much lower or if the item is unavailable locally. • Nesting of Services and Settlements • According to central place theory, market areas across an MDC would be a series of hexagons of various sizes, unless interrupted by physical features such as mountains and bodies of water. • The nesting pattern can be illustrated w/ overlapping hexagons of different sizes. Hamlets with very small market areas are represented by the smallest contiguous hexagons. Larger hexagons represent the market areas of larger settlements and are overlaid on the smaller hexagons, b/c consumers from smaller settlements shop for some goods and services in larger settlements.

43. Central Place Theory Larger market areas are fewer in number and farther apart from each other than smaller market areas and settlements. However, larger settlements also provide goods and services w/ smaller market areas; consequently, larger settlements have both larger and smaller market areas drawn around them. Hamlet—usually refers to a small settlement in a rural area, or a component of a larger settlement or municipality. They are typically unincorporated communities.

44. The threshold for UDF convenience stores. Compared to Kroger supermarkets, UDF stores are more numerous and have smaller market areas, ranges, and thresholds.

45. Compare market area for Kroger and UDF from previous slide.

46. Rank-Size Distribution of Settlements • In many MDCs, geographers observe that ranking settlements from largest to smallest (population) produces a regular patter or hierarchy. • This is rank-size rule, in which the country’s nth-largest settlement is 1/n the population of the largest settlement. In other words, the second-largest city is ½ the size of the largest, the fourth largest is ¼ size of the largest, and so on. • When plotted on logarithmic paper, the rank-size distribution forms a fairly straight line. • If the settlement hierarchy does not graph as a straight line, then the country does not have a rank-size distribution of settlements. Instead, it may follow the primate city rule, in which the largest settlement has more than twice as many people as the second-ranking settlement. In this distribution, the country’s largest city is called the primate city. In United Kingdom, London has 8 million people, whereas Birmingham, the 2nd largest, has only 2 million.

47. Rank-Size Distribution in theUnited States and Indonesia The existence of rank-size distribution indicates that the society is sufficiently wealthy to justify the provision of goods and services to consumers throughout the country. In LDCs w/o rank-size, there is not enough wealth in society to pay for a full variety of services. This absence constitutes a hardship for people who must travel long distances to reach an urban settlements w/ shops and services such as hospitals.

48. Berlin, Hamburg, Essen, and Stuttgart all have between 2-6 million people. Munich, Frankfurt, and Dusseldorf all have between 1-2 million people. Buenos Aires has over 10 million people. The next largest city has only between 1-2 million people. Thus, Buenos Aires is a primate city.

49. From the maps of Argentina & Germany, what are some ways in which the concept of core-periphery relations helps explain the development of the urban systems in these countries. • Primacy—Buenos Aires is an example of a primate city. Core-periphery relations help explain the development of the urban systems in Argentina because primate cities are economically dominant and tend to be past colonial economic hubs. • Rank-Size—Germany exemplifies the rank-size rule which reflects a mature, integrated economy. • Port City—Buenos Aires derives economic power from the fact that it’s a port city, which serves as a node of economic activity, control, & communication. • City Size—In Argentina, the cities further away from the core have diminished power (distance decay).

50. Describe how primate city and rank-size rule relates to Mexico’s urban geography.