11
The Service Package and The Service Package and Service Delivery SystemService Delivery System
Service ContentService Content
Service LevelsService Levels
22
Goods-Services SpectrumGoods-Services Spectrum
GoodsGoods
RetailingRetailing
ProcessingProcessing
CookingCooking
ServingServing
33
Service ContentService Content
Premanufacturing and Prepacking of Premanufacturing and Prepacking of services services Cost reductionCost reduction Centralised controlCentralised control
Increasing the Service ContentIncreasing the Service Content Competitive pressure, personalizing productsCompetitive pressure, personalizing products
Consumerization of productionConsumerization of production Transfer part of the service production to the Transfer part of the service production to the
customercustomer
44
Impact of Service ContentImpact of Service Content
StaffingStaffingMarketing, advertisingMarketing, advertisingTrainingTrainingInventoryInventoryProcess design and controlProcess design and controlInvestmentInvestment
Understand position on spectrum and plan Understand position on spectrum and plan direction of movementdirection of movement
55
Service LevelsService Levels
Key concern, elusive concept (athmosphere, Key concern, elusive concept (athmosphere, convenience, status, consistency in addition to convenience, status, consistency in addition to service)service)Expected service levels are met by delivering Expected service levels are met by delivering the components that the customer percieves as the components that the customer percieves as importantimportantPercieved service level combined with Percieved service level combined with price=percieved valueprice=percieved value
Service Level is a measure of the implicit and Service Level is a measure of the implicit and explicit benefits providedexplicit benefits provided
66
Setting Service LevelsSetting Service Levels
Adequate service level?Adequate service level? Level of performance that will Level of performance that will satisfysatisfy
customer expectationscustomer expectations Challenge: understand ‘satisfaction’ and Challenge: understand ‘satisfaction’ and
translate it to ‘discernable’ service levelstranslate it to ‘discernable’ service levels
Areas that require service level decisions: Areas that require service level decisions: staffing, customer throughput, quality of staffing, customer throughput, quality of facilitating good, length of queuefacilitating good, length of queue
77
Setting Service Levels (cont)Setting Service Levels (cont)
Initial service level must be set carefully: Initial service level must be set carefully: dangerous to change laterdangerous to change later
Match management and consumer Match management and consumer perception of service levelperception of service level Undertand consumer expectations through Undertand consumer expectations through
feedback from customerfeedback from customer Shape consumer expectations through Shape consumer expectations through
advertisingadvertising
88
Service Levels-Consumer Service Levels-Consumer ModelModel
Substantive service vs desired (peripheral) Substantive service vs desired (peripheral) attributes (hotel, restaurant, Village Volvo)attributes (hotel, restaurant, Village Volvo)
Understand consumer judgementUnderstand consumer judgement May show conflict when translated into May show conflict when translated into
desired attributesdesired attributesBroad menu – too much choiceBroad menu – too much choice
Exclusive small hotel – location, reservation Exclusive small hotel – location, reservation uncertaintyuncertainty
99
Consumer modelConsumer model
Consumer needsConsumer needs
Substantive needSubstantive need
ControlControl
TrustTrust
ConvenienceConvenience
Self-fulfillmentSelf-fulfillment
StatusStatus
Desired attributesDesired attributesSubstantive serviceSubstantive serviceSecuritySecurityConsistencyConsistencyAttitudeAttitudeCompletenessCompletenessConditionConditionAvailabilityAvailabilityTimingTiming
translated to
Mixture of attributes creates the service level
1010
Consumer model (cont.)Consumer model (cont.)
Security: safety (lighted parking lot)Security: safety (lighted parking lot)Consistency: standardisation, reliability (meat in Consistency: standardisation, reliability (meat in restaurant)restaurant)Attitude: service worker, printed instructions, signsAttitude: service worker, printed instructions, signsCompleteness: array of services (agent just Completeness: array of services (agent just ticket/transportation/lodging)ticket/transportation/lodging)Availability: access time, location, opening hours, Availability: access time, location, opening hours, frequency of schedulefrequency of scheduleTiming: service time (quick vs right psychological Timing: service time (quick vs right psychological moment)moment)
1111
Models of consumer judgementModels of consumer judgement
One overpowering attributeOne overpowering attribute
Single attribute with threshold minimum Single attribute with threshold minimum of other attributesof other attributes
Weighted average of attributesWeighted average of attributes
1212
Service level – Price Service level – Price combinationcombination
0
1
2
3
4
service level
pri
ce
P1
P2
P3
A B C D
E
F
Rational consumer: DRational consumer: D(at a given price P1 maximise (at a given price P1 maximise service level-D more service level-D more attractive than A)attractive than A)
Consumer chooses desired Consumer chooses desired service level: Dservice level: D
(for service level SL minimise (for service level SL minimise price-D better than F or E)price-D better than F or E)
Service firm: FService firm: FA to B nominal expense to firm
Successful firm B to E at nominal expense
Una
ccep
tabl
e
to c
usto
mer
unpr
ofita
ble
1313
Service Level ChallengeService Level Challenge
Difficult to measure and Difficult to measure and communicate communicate service service levelslevelsInitial service level must be set with care (no Initial service level must be set with care (no turning back)turning back)Service level must be designed into the service Service level must be designed into the service delivery systemdelivery systemCannot be introduced later with inspection or QC Cannot be introduced later with inspection or QC ((Simultaneity)Simultaneity)Hotel complaint: light bulbs, towels. More inspection? Encouraging workers?Hotel complaint: light bulbs, towels. More inspection? Encouraging workers?Set routine for making up a room; same sequence in all rooms. Set routine for making up a room; same sequence in all rooms.
minimises effort for worker, minimises effort for worker, ensures standardsensures standards
1414
Human input in service levelsHuman input in service levels
Labor intensive (difficult to control service level)Labor intensive (difficult to control service level) substitute technology for peoplesubstitute technology for people
Missing elementsMissing elements Human presence (warmth)Human presence (warmth) Human assurance (security, trust)Human assurance (security, trust) Human response (infinite variations, tailored to need)Human response (infinite variations, tailored to need) Human dexterityHuman dexterity Human reasoningHuman reasoning
Important to identify functional tasks that are provided by humans as the starting point for controlling and measuring service levels
1515
Servive level focusServive level focus
11 33
22 44
ServicesFew Many
Markets
Few
Many
•Start in Cell 1
•Move to Cell 2: Charter airline expands to businessmen.
•Can the same service delivery system control service levels for both markets?
•Move to Cell 3: airline also offering accomodation, car rental (successful?)
•Can the same service delivery system control service levels for different types of services?
•Move to Cell 4: dangerous. UNFOCUSING (being all things to all people)
1616
Integrating the service package,service Integrating the service package,service delivery system and service levelsdelivery system and service levels
Service Package•Supporting facility•Facilitating good•Explicit services•Implicit services
Service Delivery System•Quality of facilitating good
•Athmosphere & image of firm•Attitude of employees
Service Levelsdefined in terms of performance levels of
•Goods•Facilities
•Personnel
DICTATES AND IS DEFINED BY
IS DEFINED BY MANAGEMENT TOCREATE
OPERATES TO CREATE
Consumer perceived service levels
COMMUNICATED BY
ADVERTISING PURCHASES
