The Nature oI Services

earning 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.
An Integrated Approach to Service Management An Integrated Approach to Service Management
The Eight Components The 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 Resources Operations, and Human Resources
Service/Product Bundle Service/Product Bundle
lement lement Core Core oods oods
xample xample
Core Core Service Service
xample xample
Business Business Custom clothier Custom clothier Business hotel Business hotel
Core Core Business suits Business suits Room for the Room for the
night night
Peripheral Peripheral
Goods Goods
Garment bag Garment bag Bath robe Bath robe
Peripheral Peripheral
Service Service
Deferred Deferred
payment plans payment plans
n house n house
restaurant restaurant
Variant Variant Coffee lounge Coffee lounge Airport shuttle Airport shuttle
The Service Process Matrix
Degree Degree of nteraction and Customization
of labor ntensity ow High
Service factory Service shop
Airlines Hospitals
ow Trucking Auto repair
Hotels Other repair services
Resorts and recreation
Mass service Professional service
Retailing Doctors
High Wholesaling awyers
Schools Accountants
Retail aspects oI Architects
commercial banking
The Service Package
Supporting Facility: %he physical resources that must
be in place before a service can be sold. xamples
are golf course, ski lift, hospital, airplane.
Facilitating oods: %he material consumed by the
buyer or items provided by the consumer. xamples
are food items, legal documents, golf clubs, medical
history.
Information: perations data or information that is
provided by the customer to enable efficient and
customized service. xamples are patient medical
records, seats available on a flight, customer
preferences, location of customer to dispatch a taxi.
The Service Package (cont.)
Explicit Services: Benefits readily observable by the
senses. %he essential or intrinsic features.
xamples 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. xamples are privacy of loan office, security
of a well lighted parking lot.
Distinctive Characteristics oI 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 of
idle capacity, need to match supply with demand
ntangibility creative advertising, no patent
protection, importance of reputation
Heterogeneity customer participation in delivery
process results in variability
Strategic Service ClassiIication
(Nature oI the Service Act)
Strategic Service ClassiIication
(Nature oI the Service Act)
Direct Recipient of the Service
Nature of
the Service Act People %hings
People's bodies Physical possessions
Health care Freight transportation
Passenger transportation Repair and maintenance
%angible actions Beauty salons Veterinary care
xercise clinics Janitorial services
Restaurants Laundry and dry cleaning
People's minds ntangible assets
ducation Banking
ntangible actions Broadcasting Legal services
nformation services Accounting
%heaters Securities
Museums nsurance
Strategic Service ClassiIication
(Relationship with Customers)
Strategic Service ClassiIication
(Relationship with Customers)
%pe of ReIationship between Service Organization and Its Customers
Nature of
Service DeIiver Membership relationship No formal relationship
nsurance Radio station
%elephone subscription Police protection
Continuous delivery lectric Utility Lighthouse
of service Banking Public Highway
Long-distance phone calls Restaurant
%heater series tickets Pay phone
Discrete transactions %ransit pass %oll highway
Sam's Wholesale Club Movie theater
Airline frequent flyer Public transportation
Strategic Service ClassiIication
(Customization and Judgment)
Strategic Service ClassiIication
(Customization and Judgment)
tent to Which Service Characteristics Are Customized
tent to Which PersonneI
ercise Judgment in Meeting
Customer Needs High Low
Surgery Preventive health programs
High %axi services ducation (large classes)
Gourmet restaurant Family restaurant
%elephone service Public transportation
Hotel services Spectator sports
Low Retail banking Movie theater
Cafeteria nstitutional food service
Strategic Service ClassiIication
(Nature oI Demand and Supply)
Strategic Service ClassiIication
(Nature oI Demand and Supply)
tent of Demand FIuctuation over %ime
tent to which SuppI
Is Constrained Wide Narrow
lectricity nsurance
Peak demand can %elephone Legal services
usually be met Police emergency Banking
without a major delay Hospital maternity unit Laundry and dry cleaning
%ax preparation Fast food restaurant
Peak demand regularly Passenger transportation Movie theater
exceeds capacity Hotels and motels Gas station
Strategic Service ClassiIication
(Method oI Service Delivery)
Strategic Service ClassiIication
(Method oI Service Delivery)
AvaiIabiIit of Service OutIets
Nature of Interaction
between Customer and
Service Organization Single site Multiple site
Customer travels to %heater Bus service
service organization Barbershop Fast-food chain
Service provider %axi Mail delivery
travels to customer Pest control service AAA emergency repairs
%axi
%ransaction is at Credit card company Broadcast network
arm's length Local %V station %elephone company
Open Systems View oI 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 mpowerment
Location demand Marketing function supply %raining
nteract with consumers Attitudes
Control demand
Modify as necessary
Define standard
Service package
Supporting facility
Communicate Facilitating goods Basis of
by advertising xplicit services selection
mplicit services
Village Volvo`s Service Package
Supporting Facility
Facilitating Goods
nformation
xplicit Services
mplicit Services
Village Volvo`s Distinctive
Service Characteristics
ntangibility ntangibility
Perishability
Heterogeneity
Simultaneity
Customer Participation in the Service Process
Village Volvo`s Service Village Volvo`s Service
ClassiIication ClassiIication
Nature of the service act Nature of the service act
Relationship with customers Relationship with customers
Customization and judgement Customization and judgement
Nature of demand and supply Nature of demand and supply
Method of service delivery Method of service delivery
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?
presso ube Facility presso ube Facility
presso ube`s Service Package
Supporting Facility
Facilitating Goods
nformation
xplicit Services
mplicit Services
presso ube`s Distinctive
Service Characteristics
ntangibility ntangibility
Perishability
Heterogeneity
Simultaneity
Customer Participation in the Service Process
presso ube`s Service presso ube`s Service
ClassiIication ClassiIication
Nature of the service act Nature of the service act
Relationship with customers Relationship with customers
Customization and judgement Customization and judgement
Nature of demand and supply Nature of demand and supply
Method of service delivery Method of service delivery
Beyond presso ube Beyond presso ube
What elements of Xpresso Lube's What elements of Xpresso Lube's
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 combined what other services could be combined
to add value for the customer? to add value for the customer?
Topics Ior Discussion
What are the characteristics of services that will be
most appropriate for nternet delivery?
When does collecting information through service
membership become an invasion of privacy?
What are some management problems associated
with allowing service employees to exercise
judgement in meeting customer needs?
What factors are important for a manager to consider
when attempting to enhance a service firm's image?
What contributions to the management of
professional service firms can a business school
graduate provide?
nteractive Class Exercise nteractive Class Exercise
%he class breaks into five groups and each %he class breaks into five groups and each
group is assigned one of the service group is assigned one of the service
classifications (e.g., nature of act, relationship classifications (e.g., nature of act, relationship
with customer, customization, nature of with customer, customization, nature of
demand, or method of delivery) to come up demand, or method of delivery) to come up
with an example for each of the four with an example for each of the four
quadrants in the matrix. quadrants in the matrix.