nature f services
TRANSCRIPT
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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)
Strategic Service Classification
(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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Strategic Service Classification
(Relationship with Customers)
Strategic Service Classification
(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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Strategic Service Classification
(Customization and Judgment)
Strategic Service Classification
(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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Strategic Service Classification
(Nature of Demand and Supply)
Strategic Service Classification
(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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Strategic Service Classification
(Method of Service Delivery)
Strategic Service Classification
(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.