1.PASIG CATHOLIC COLLEGEMKTG 29 : Service Marketing Management Part 2 Customer Involvement in ServiceProcesses Professor: Mr. Abelito T. Quiwa. MBASchool Year 2012 2013

2. After-sales service is more importantthan assistance before sales.It is through such service that one getspermanent customers. -Konosuke Matsushita,founder , Matsushita Electric Industrial Company. Ltd.,Japan 3. We will explore the followingquestions in this particular chapter In what managerially-relevant ways to serviceddiffer from one another? How are services classified? What are the underlying processes by whichservices are created and delivered? How does the nature of a customers contact witha service vary according to the underlyingprocess? Why do different service processes requiredifferent marketing approaches? 4. How does services differ from oneanother? As noted by Shelby Hunt, a researcher in marketing, thepurpose of theory is to increase scientific understandingthrough a systematized structure capable of both explainingand predicting phenomena. Classification schemes, he said, play fundamental roles in the development of a discipline,since they are the primary means for organizationalphenomena into classes or groups that are amenable tosystematic investigation and theory development. Marketing practitioners have long recognized the value ofdeveloping distinctive strategies for different types of goods. Another major classification is that of the durable goods.Durability is closely associated with frequency of purchasewhich has important implications for the development ofdistribution and communications strategies. 5. How does services differ fromone another? Yet, another classification is a consumer goods(those purchased for personal or household use)versus industrial goods (those purchased bycompanies and other organizations). While these goods-based classification schemesare helpful, they do not really address the keystrategies issues facing service managers.Service need to be classified into marketing-relevant groups, based on points of similaritybetween different industries. Such classificationcan help managers focus on marketing strategiesthat are relevant to specific service situation. 6. How Might Services Be Classified The traditional way of grouping services is by industry.This grouping help define the core products offered bythe firm and enable an understanding of both customerneeds and competition. Question: On a traditional way what is a groupingservices by industry? Selected ways of classifying services: Extent to which service processes are tangible Who or what is the direct recipient of the serviceprocess? The place and time of service delivery Customization versus standardization Nature of the relationship with customers Extent to which demand and supply are in balance Extent to which facilities, equipment and people are partof the service experience 7. How Might Services Be Classified Selected ways of classifying services: The extent to which service processes are tangible. Does the service entail something physical andtangible (like sleeping in a hotel bed or dry cleaningyour clothes), or are its processes more tangible (liketeaching)? Different services processes not only shape thenature of the service delivery system but also affectthe role of employees and the experience ofcustomers. 8. How Might Services Be Classified Selected ways of classifying services: Who or what is the direct recipient of the service process? Some services, such as hair cutting or public transportation,are directed at customers who are present in person. Service to the customer in person tend to be somewhat morecomplex. The place and time of service delivery When designing delivery systems, service marketers must askthemselves whether customers need to visit the serviceorganization at its own sites or whether the service goes to thecustomer. Delivery channels could also be physical, like postal delivery(as with applying for insurance and paying the periodicpremiums) or electronic ( as with Internet based services thatallow you to trans-act in cyberspace). 9. How Might Services Be Classified Selected ways of classifying services: Customization versus standardization Services can be classified according to the degree ofcustomization or standardization involved in servicedelivery. An eye examination by an optometrist can proceedas per standardized procedure but a customizeddiagnosis is called for if a prescription for correctionlenses is needed. 10. How Might Services Be Classified Selected ways of classifying services: Nature of the relationship with customers Some services involve a formal relationships, in whicheach customer is known to the organization ( or at leastto its computer) and all transaction are individuallyrecorded. Sometimes, companies create a special clubmembership or route of a frequent user programs toreward loyal users. For instance, both the hairdresser and the restaurantcould record customers names and addresses andperiodically make them special offers. 11. How Might Services Be Classified Selected ways of classifying services: Extent to which demand and supply are in balance. Some service industries face steady demand fortheir services while others encounter significantfluctuations. In such situations, either capacity must be adjustedto accommodate the level of demand or marketingstrategies should be such that they can predict,manage and smooth demand levels to bring them inline with capacity. Question: What should be done if a serviceindustries encounter significant fluctuation ofdemand for their services? 12. How Might Services Be Classified Selected ways of classifying services: Extent to which facilities, equipment and people are part of the service experience. Customers service experiences are shaped, in the part, by the extent to which they are exposed to tangible elements in the delivery system. ( Ex. Is hospital) By contrast, it is rare for a telephone customer to encounter physical equipment, other than the telephone handset, or company personnel. Implication of classification Schemes The service classification schemes that we have discussed can help managers better answer the following questions: What does our service operational actually do? What sorts of processes are involved in creating the core product that we offer to customers? Where do customers fit in our operation? 13. Howservice classification schemes that we have discussed can help TheMight Services Be Classifiedmanagers better answer the following questions: What does our service operational actually do? What sorts of processes are involved in creating the core productthat we offer to customers? Where do customers fit in our operation? The answer will depend on the nature of the underlying serviceprocess required to create and deliver a particular service. WE now turn to the most fundamental of the 8Ps of integratedservice management: the processes by which service products arecreated and delivered. Our focus will be on the core service product, but it should be notedthat supplementary services also require delivery and the processemployed may differ from the used for the core product. 14. Service as Process Because customers are often involved in serviceproduction, marketers do need to understand thenature of the processes to which their customersmay be exposed. A process is a particular method of operation or aseries of actions, typically involving multiple stepsthat often need to take place in a defined sequence. Service processes range from relatively simpleprocedures involving only a few steps, such as fillinga cars tank with fuel, to highly complex activitiessuch as transporting passengers on an internationalflight. 15. Service as Process Categorizing Service Processes From a purely operational perspective, service can be categorized into four broad groups.1. People processing2. Possession processing3. Mental stimulus processing4. Information processing 16. Service As a Process From a purely operational perspective, service can be categorized into four broad groups.1. People processing involves tangible actions to peoples bodies (Ex. Transportation and hairdressing).2. Possession processing covers tangible actions to the customers physical possessions. (Ex. Air freight, car repair and cleaning services).3. Mental stimulus processing refers to intangible actions directed at peoples minds. (Ex. Entertainment, sport events and education) 17. People Processing If the customers want the benefits that a people-processing service has to offer, they must be prepared tospend time operating actively with the service provider. The output from these services, whose period of deliverycan vary from minutes to months, is a customer who hasreached her destination, or satisfied his hunger, or is nowsporting clean and stylishly-cut hair, or has had a coupleof nights sleep away from home, or is now in betterphysical health. It is important for managers to think about process andoutput in terms of what happens to the customer becausethat helps them to identify what benefits are beingcreated. 18. Possession Processing Possession processing services includetransport and storage of goods, wholesale andretail distribution, and installation, removal anddisposal of equipment; In short, the entire value-adding chain ofactivities during the lifetime of the object inquestion. Customers are less physically involved with thistype of service than with people-processingservices. 19. Mental Stimulus Processing Services that interact with peoples minds includeeducation, news and information, professional advice,psychotherapy, entertainment and certain religiouspractices. Service such as entertainment and education are oftencreated in one place and transmitted by television orradio to individual customers in distant locations. Since the core content of all services in this category isinformation-based (whether it is much, speech or visualimagers), they can easily be converted into digital bits,recorded for posterity and transformed into amanufactured product, such as a compact disc,videotape, or audio-cassette-much like any other physicalgood-or delivered via the Internet. 20. Information Processing Information processing has been revolutionized by the use ofcomputers. However, not all information is processed by machines. Among the services that are highly dependent on effective collectionand processing of information are financial and professional servicessuch as accounting, law, market research, management consultingand medical diagnosis. The extent of customer involvement in both information and mentalstimulus processing services is often determined more by traditionand a desire to meet the supplier face-to-face, than by the needs ofthe operational process. As technology improves and people continue to become morecomfortable with videophones or the Internet, we can expect to see acontinuing shift away from face-to-face transactions. 21. Service Process and TheirManagement Challenges By representing processes visually, one can clearly see the differences in customer involvement with service organization for each of the four processes in their purest forms.1. Stay at a hotel (people processing )2. Repair a VCR( possession processing )3. Weather forecast (mental stimulus processing)4. Debit card application ( information processing) 22. Identifying Service Benefits The key is to understand the specific benefits thatcustomers hope to obtain from the serviceprovider. Many firms bundle together different activities inan effort to provide good, service, but innovationin service delivery requires a constant focus onthe processes underlying delivery of the coreproduct. Operation managers need to work with marketingpersonnel to improve their chances of designingnew processes that deliver the benefits desiredby customers in user-friendly ways. 23. Designing the Service Factory Customer involvement in the core activity of services mayvary sharply for each of the four categories of serviceprocesses. When customer visit a service factory, their satisfaction willbe influenced by such factors as the following: Appearance and features of service facilities-both exteriorand interior Encounter with service personnel Interactions with self-service equipment Characteristics and behavior of other customers Marketers need to work with HR to ensure that thoseemployees who are in contact with customers present anacceptable profile. 24. Using Alternative Channels forService Delivery Managers responsible for possession-processing, mental stimulus-processing and information- processing services need to possibly include:1) Letting customers come to a user-friendly factory2) Limiting contact to a small retail office that is separate from the main factory(or back office)3) Coming to the customers home or office;4) Conducting business at arms length Rethinking service-delivery procedures for all but people-processing services may allow a firm to get customers out of the factory and transform a high-contact service into a low-contact one. 25. Making the Most of InformationTechnology Many examples of using technology to transform the nature of the core product and its delivery system are based on radio and television. Modern telecommunications and computer technologies allow customers to connect their own computers, or other input-output devices, with the service providers system in another location. 26. Balancing Supply and Demand In general, services that process people andphysical objects are more likely to face capacitylimitations than those that are information based. In recent years, information processing andtransmission capacity have been vastly increasedby greater computing power, digital switching andthe replacement of coaxial cables with fibre-opticones. The issue of demand and capacity managementis so central to the productive use of assets, andthus profitability, that we will devote significantspace. 27. Taking into Account People as Part ofthe Product In many people-processing services, customersmeet lots of employees ( the people element ofthe 8 Ps) and often interact with them over a longperiod of time. Service business of this type tend to be harder tomanage because of the human element. As manager, how would you get all customers toclear their tables after eating at a quick servicerestaurant? How would you ensure that passengers do notdisturb others on the flight? 28. Avoiding the Risk of Over-Generalization The ninth characteristics-the ability to useelectronic deliver channel-applies to the twoinformation-based categories-mental stimulusprocessing and information processing. Historically, the first eight characteristics alsoapply quite well to many services in the twoinformation-based categories, because thetraditional delivery model used to requirecustomers to visit a local service factory to obtainthe information. 29. Conclusion Although not all services are the same, many doshare important characteristics. Rather than focusingon broad distinctions between goods and services, itis more useful to identify different categories ofservices and to study the marketing, operations andhuman resource challenges within each of thesegroups. The four-way classification scheme discussed indepth in this chapter focuses on different types ofservice processes. Some services require directphysical contact with customers such ashairdressing and passenger transport, while othersfocus on contact with peoples minds such aseducation and entertainment. Some involvesprocessing of physical objects such as cleaning and 30. Conclusion The processes that underline the creation and delivery of any services have a major impact on marketing and human resources. Process design, or re-design, is not just a task for the operations department. Both managers and employees must understand underlying processes-particularly those in which customers are actively involved-in order to run a service business that is both efficient and user-friendly.