2
Service Management (5e)
Operations, Strategy, Information Technology
By
Fitzsimmons and Fitzsimmons
Chapter – 2
The Nature of Services
2-2
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.
Discussthe insights obtained from a strategic classification of
services.
Discuss the role of a service manager from an open-systems view
of service.
2-3
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 Evidence
Require the Integration of Marketing, Operations, and Human
Resources
2-4
Service/Product Bundle
Element Core Goods Core Service
Example Example
Business Custom clothier Business hotel
Core Business suits Room for the night
Peripheral Garment bag Bath robe
Goods
Peripheral Deferred payment In house restaurant
Service plans
Variant Coffee lounge Airport shuttle
2-5
The Service Process Matrix
Degree of labor Degree of Interaction and Customization
Intensity
Low High
Service factory: Service shop:
* Airlines * Hospitals
Low * 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
2-6
The Service Package
Supporting 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.
2-7
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.
2-8
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 of idle
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
2-9
Strategic Service Classification (Nature
of the Service Act)
Direct Recipient of the Service
Nature of
the Service Act People Things
People’s bodies: Physical possessions:
Health care Freight transportation
Passenger transportation Repair and maintenance
Tangible actions Beauty salons Veterinary care
Exercise clinics Janitorial services
Restaurants Laundry and dry cleaning
People’s minds: Intangible assets:
Education Banking
Intangible actions Broadcasting Legal services
Information services Accounting
Theaters Securities
Museums Insurance
2-10
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
Transit pass Toll highway
transactions
Sam’s Wholesale Club Movie theater
Airline frequent flyer Public transportation
2-11
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
2-12
Strategic Service Classification (Nature
of Demand and Supply)
Extent of Demand Fluctuation over Time
Extent to which Supply
Is Constrained Wide Narrow
Insurance
Peak demand can Electricity
Legal services
usually be met without Telephone
Banking
a major delay Police emergency
Laundry and dry
Hospital maternity unit
cleaning
Tax preparation Fast food restaurant
Peak demand regularly
Passenger transportation Movie theater
exceeds capacity
Hotels and motels Gas station
2-13
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
Taxi
Service provider Mail delivery
Pest control service
travels to customer AAA emergency repairs
Taxi
Transaction is at Credit card company Broadcast network
arm’s length Local TV station Telephone company
2-14
Open Systems View of Services
2-15
Topics for Discussion
Whatare 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?
Whatfactors 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?
