Nature f Services

8/2/2019 Nature f Services

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The Nature of Services


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Learning Objectives

Classify a service into one of four categories

using the service process matrix.

Describe a service using the four dimensions

of the service package.

Discuss the managerial implications of the

distinctive characteristics of a service

operation.

Discuss the insights obtained from a strategic

classification of services.

Discuss the role of a service manager from

an open-systems view of service.


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An Integrated Approach to Service ManagementAn Integrated Approach to Service Management

The Eight ComponentsThe Eight Components Product Elements Product Elements Place, Cyberspace, and Time Place, Cyberspace, and Time Promotion and Education Promotion and Education Price and Other User Outlays Price and Other User Outlays+ Process+ Process+ Productivity and Quality+ Productivity and Quality

+ People+ People+ Physical Evidence+ Physical Evidence

Require the Integration of Marketing,Require the Integration of Marketing,Operations, and Human ResourcesOperations, and Human Resources


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Service/Product BundleService/Product Bundle

ElementElement CoreCore GoodsGoods

ExampleExample

CoreCore ServiceService

ExampleExample

BusinessBusiness Custom clothier Custom clothier Business hotelBusiness hotel

CoreCore Business suitsBusiness suits Room for theRoom for the

nightnight

PeripheralPeripheral

GoodsGoods

Garment bagGarment bag Bath robeBath robe

PeripheralPeripheral

ServiceService

DeferredDeferred

payment planspayment plans

In houseIn house

restaurantrestaurant

VariantVariant Coffee loungeCoffee lounge Airport shuttleAirport shuttle


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The Service Process Matrix

Degree Degree of Interaction and Customization

of labor Intensity Low HighService factory: Service shop:

* Airlines * HospitalsLow * Trucking * Auto repair

* Hotels * Other repair services

* Resorts and recreation

Mass service: Professional service:

* Retailing * Doctors

High * Wholesaling *Lawyers

* Schools * Accountants

* Retail aspects of * Architects

commercial banking


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The Service Package

Supporting Facility: The physical resources that mustbe in place before a service can be sold. Examplesare golf course, ski lift, hospital, airplane.

FacilitatingGoods: The material consumed by thebuyer or items provided by the consumer. Examplesare food items, legal documents, golf clubs, medicalhistory.

Information: Operations data or information that is

provided by the customer to enable efficient andcustomized service. Examples are patient medicalrecords, seats available on a flight, customerpreferences, location of customer to dispatch a taxi.


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The Service Package (cont.)

Explicit Services: Benefits readily observable by the

senses. The essential or intrinsic features.

Examples are quality of meal, attitude of the waiter,

on-time departure.

Implicit Services: Psychological benefits or extrinsic

features which the consumer may sense only

vaguely. Examples are privacy of loan office, security

of a well lighted parking lot.


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Distinctive Characteristics of Services

Customer Participation in the Service Process:attention to facility design but opportunities for co-production

Simultaneity: opportunities for personal selling,

interaction creates customer perceptions of quality

Perishability: cannot inventory, opportunity loss ofidle capacity, need to match supply with demand

Intangibility: creative advertising, no patent

protection, importance of reputation Heterogeneity: customer participation in delivery

process results in variability


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Strategic Service Classification

(Nature of the Service Act)


(Nature of the Service Act)Direct Recipient of the Service

Nature of

the Service Act People Things

Peoples bodies: Physical possessions:

Health care Freight transportation

Passenger transportation Repair and maintenance

Tangible actions Beauty salons Veterinary careExercise clinics Janitorial services

Restaurants Laundry and dry cleaning

Peoples minds: Intangible assets:

Education Banking

Intangible actions Broadcasting Legal servicesInformation services Accounting

Theaters Securities

Museums Insurance


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(Relationship with Customers)


(Relationship with Customers)Type of Relationship between Service Organization and Its Customers

Nature of

Service Delivery Membership relationship No formal relationship

Insurance Radio station

Telephone subscription Police protection

Continuous delivery Electric Utility Lighthouse

of service Banking Public Highway

Long-distance phone calls Restaurant

Theater series tickets Pay phone

Discrete transactions Transit pass Toll highwaySams Wholesale Club Movie theater

Airline frequent flyer Public transportation


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(Customization and Judgment)


(Customization and Judgment)Extent to Which Service Characteristics Are Customized

Extent to Which Personnel

Exercise Judgment in Meeting

Customer Needs High Low

Surgery Preventive health programs

High Taxi services Education (large classes)

Gourmet restaurant Family restaurant

Telephone service Public transportation

Hotel services Spectator sports

Low Retail banking Movie theater

Cafeteria Institutional food service


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(Nature of Demand and Supply)


(Nature of Demand and Supply)Extent of Demand Fluctuation overTime

Extent to which Supply

Is Constrained Wide Narrow

Electricity Insurance

Peak demand can Telephone Legal services

usually be met Police emergency Banking

without a major delay Hospital maternity unit Laundry and dry cleaning

Tax preparation Fast food restaurant

Peak demand regularly Passenger transportation Movie theaterexceeds capacity Hotels and motels Gas station


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(Method of Service Delivery)


(Method of Service Delivery)Availability of Service Outlets

Nature of Interaction

between Customer and

Service Organization Single site Multiple site

Customer travels to Theater Bus service

service organization Barbershop Fast-food chain

Service provider Taxi Mail delivery

travels to customer Pest control service AAA emergency repairs

Taxi

Transaction is at Credit card company Broadcast network

arms length Local TV station Telephone company


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Open Systems View of Services

Service Process Consumer Evaluation

Consumer arrivals Consumer participant departures Criteria

(input) Consumer-Provider ( output) Measurement

interface

Control Monitor

Customer demand Service operations manager Service personnel

Production function:

Perceived needs Alter Monitor and control process Schedule Empowerment

Location demand Marketing function: supply Training

Interact with consumers Attitudes

Control demand

Modify as necessary

Define standard

Service package

Supporting facility

Communicate Facilitating goods Basis of

by advertising Explicit services selection

Implicit services


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Village Volvos Service Package

Supporting Facility

Facilitating Goods

Information

Explicit Services

Implicit Services


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Village Volvos Distinctive

Service Characteristics

IntangibilityIntangibility

Perishability

Heterogeneity

Simultaneity

Customer Participation in the Service Process


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Village Volvos ServiceVillage Volvos Service

ClassificationClassification

Nature of the service actNature of the service act

Relationship with customersRelationship with customers

Customization and judgementCustomization and judgement

Nature of demand and supplyNature of demand and supply

Method of service deliveryMethod of service delivery


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Managing Village Volvo

How could Village Volvo manage its

back office (repair operations) like a

factory?

How can Village Volvo differentiate itself

from Volvo dealers?


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Xpresso Lube FacilityXpresso Lube Facility


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Xpresso Lubes Service Package

Supporting Facility

Facilitating Goods

Information

E

xplicit Services

Implicit Services


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Xpresso Lubes Distinctive

Service Characteristics

IntangibilityIntangibility

Perishability

Heterogeneity

Simultaneity

Customer Participation in the Service Process


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Xpresso Lubes ServiceXpresso Lubes Service

ClassificationClassification

Nature of the service actNature of the service act

Relationship with customersRelationship with customers

Customization and judgementCustomization and judgement

Nature of demand and supplyNature of demand and supply

Method of service deliveryMethod of service delivery


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Beyond Xpresso LubeBeyond Xpresso Lube

What elements of Xpresso LubesWhat elements of Xpresso Lubes

location contribute to its success?location contribute to its success?

Given the example of Xpresso Lube,Given the example of Xpresso Lube,

what other services could be combinedwhat other services could be combined

toadd value for the customer?toadd value for the customer?


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Topics for Discussion

What are the characteristics of services that will bemost appropriate for Internet delivery?

When does collecting information through service

membership become an invasion of privacy? What are some management problems associated

with allowing service employees to exercisejudgement in meeting customer needs?

What factors are important for a manager to consider

when attempting to enhance a service firms image? What contributions to the management of

professional service firms can a business schoolgraduate provide?


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Interactive Class ExerciseInteractive Class Exercise

The class breaks into five groups and eachThe class breaks into five groups and each

group is assigned one of the servicegroup is assigned one of the service

classifications (e.g., nature of act, relationshipclassifications (e.g., nature of act, relationshipwith customer, customization, nature ofwith customer, customization, nature of

demand, or method of delivery) to come updemand, or method of delivery) to come up

with an example for each of the fourwith an example for each of the four

quadrants in the matrix.quadrants in the matrix.

Nature f Services

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