2 Learning ObjectivesClassify 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.
3 An Integrated Approach to Service Management The Eight Components • Product Elements • Place, Cyberspace, and Time • Promotion and Education • Price and Other User Outlays + Process + Productivity and Quality + People + Physical EvidenceRequire the Integration of Marketing, Operations, and Human Resources
4 Service/Product Bundle ElementCore GoodsExampleCore ServiceBusinessCustom clothierBusiness hotelCoreBusiness suitsRoom for the nightPeripheralGoodsGarment bagBath robeServiceDeferred payment plansIn house restaurantVariantCoffee loungeAirport shuttle
5 The Service Process Matrix Degree Degree of Interaction and Customizationof labor Intensity Low HighService factory: Service shop:* Airlines * HospitalsLow * Trucking * Auto repair* Hotels * Other repair services* Resorts and recreationMass service: Professional service:* Retailing * DoctorsHigh * Wholesaling * Lawyers* Schools * Accountants* Retail aspects of * Architectscommercial banking
6 The Service PackageSupporting Facility: The physical resources that must be in place before a service can be sold. Examples are golf course, ski lift, hospital, airplane.Facilitating Goods: The material consumed by the buyer or items provided by the consumer. Examples are food items, legal documents, golf clubs, medical history.Information: Operations data or information that is provided by the customer to enable efficient and customized service. Examples are patient medical records, seats available on a flight, customer preferences, location of customer to dispatch a taxi.
7 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.
8 Distinctive Characteristics of Services Customer Participation in the Service Process: attention to facility design but opportunities for co-productionSimultaneity: opportunities for personal selling, interaction creates customer perceptions of qualityPerishability: cannot inventory, opportunity loss of idle capacity, need to match supply with demandIntangibility: creative advertising, no patent protection, importance of reputationHeterogeneity: customer participation in delivery process results in variability
9 Strategic Service Classification (Nature of the Service Act) Direct Recipient of the ServiceNature ofthe Service Act People ThingsPeople’s bodies: Physical possessions:Health care Freight transportationPassenger transportation Repair and maintenanceTangible actions Beauty salons Veterinary careExercise clinics Janitorial servicesRestaurants Laundry and dry cleaningPeople’s minds: Intangible assets:Education BankingIntangible actions Broadcasting Legal servicesInformation services AccountingTheaters SecuritiesMuseums Insurance
10 Strategic Service Classification (Relationship with Customers) Type of Relationship between Service Organization and Its CustomersNature ofService Delivery “Membership” relationship No formal relationshipInsurance Radio stationTelephone subscription Police protectionContinuous delivery Electric Utility Lighthouseof service Banking Public HighwayLong-distance phone calls RestaurantTheater series tickets Pay phoneDiscrete transactions Transit pass Toll highwaySam’s Wholesale Club Movie theaterAirline frequent flyer Public transportation
11 Strategic Service Classification (Customization and Judgment) Extent to Which Service Characteristics Are CustomizedExtent to Which PersonnelExercise Judgment in MeetingCustomer Needs High LowSurgery Preventive health programsHigh Taxi services Education (large classes) Gourmet restaurant Family restaurantTelephone service Public transportationHotel services Spectator sportsLow Retail banking Movie theaterCafeteria Institutional food service
12 Strategic Service Classification (Nature of Demand and Supply) Extent of Demand Fluctuation over TimeExtent to which SupplyIs Constrained Wide NarrowElectricity InsurancePeak demand can Telephone Legal servicesusually be met Police emergency Bankingwithout a major delay Hospital maternity unit Laundry and dry cleaningTax preparation Fast food restaurantPeak demand regularly Passenger transportation Movie theaterexceeds capacity Hotels and motels Gas station
13 Strategic Service Classification (Method of Service Delivery) Availability of Service OutletsNature of Interactionbetween Customer andService Organization Single site Multiple siteCustomer travels to Theater Bus serviceservice organization Barbershop Fast-food chainService provider Taxi Mail deliverytravels to customer Pest control service AAA emergency repairsTaxiTransaction is at Credit card company Broadcast networkarm’s length Local TV station Telephone company
14 Open Systems View of Services Service Process Consumer EvaluationConsumer arrivals Consumer participant departures Criteria(input) Consumer-Provider ( output) MeasurementinterfaceControl MonitorCustomer demand Service operations manager Service personnelProduction function:Perceived needs Alter Monitor and control process Schedule EmpowermentLocation demand Marketing function: supply TrainingInteract with consumers AttitudesControl demandModify as necessaryDefine standardService packageSupporting facilityCommunicate Facilitating goods Basis ofby advertising Explicit services selectionImplicit services
15 Village Volvo’s Service Package Supporting FacilityFacilitating GoodsInformationExplicit ServicesImplicit Services
16 Village Volvo’s Distinctive Service Characteristics IntangibilityPerishabilityHeterogeneitySimultaneityCustomer Participation in the Service Process
17 Village Volvo’s Service Classification Nature of the service actRelationship with customersCustomization and judgementNature of demand and supplyMethod of service delivery
18 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?
20 Xpresso Lube’s Service Package Supporting FacilityFacilitating GoodsInformationExplicit ServicesImplicit Services
21 Xpresso Lube’s Distinctive Service Characteristics IntangibilityPerishabilityHeterogeneitySimultaneityCustomer Participation in the Service Process
22 Xpresso Lube’s Service Classification Nature of the service actRelationship with customersCustomization and judgementNature of demand and supplyMethod of service delivery
23 Beyond Xpresso LubeWhat elements of Xpresso Lube’s location contribute to its success?Given the example of Xpresso Lube, what other services could be combined to “add value” for the customer?
24 Topics for DiscussionWhat are the characteristics of services that will be most 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 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?
25 Interactive Class Exercise The class breaks into five groups and each group is assigned one of the service classifications (e.g., nature of act, relationship with customer, customization, nature of demand, or method of delivery) to come up with an example for each of the four quadrants in the matrix.