Unit 2 the nature of service ban chat cua dich vu

Microsoft PowerPoint Unit 2 The Nature Of Services Nguyen Manh Tuan Distinctive characteristics of Serivce management The Service package Grouping Services by delivery process Clasigy Services for Strategic insights

Unit 2

The Nature Of Services

Nguyen Manh Tuan

Distinctive Characteristics of Service

Operations

The Service Package

Grouping Services by Delivery Process

Classifying Services for Strategic

Insights

An Open-Systems View of Service

Learning Objectives

 Classify a service into 1 of 4 categories using the

service process matrix

 Describe a service using 4 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 managerial implications from an

open-systems view of service

Distinctive Characteristics of Service Operations

 The distinction between a product and a service is hard to

Business Custom clothier Business hotel

Core Business suits Room for the night

Peripheral Goods Garment bag Bathrobe

Peripheral

Service

Deferred payment plans In house restaurant

Variant Coffee lounge Airport shuttle

Distinctive Characteristics of Service Operations

 Distinction between inputs and resources

 Inputs are the customers themselves, and

 Resources are the facilitating goods, employee labor,

and capital at the command of the service manager

 To function, the service system must interact with the

customers as participants in the service process

 Because customers typically arrive at their own discretion and with unique demands on the

service system, matching service capacity with demand is a challenge.

 Many of the unique characteristics of services, such

as customer participation and perishability, are interrelated

Distinctive Characteristics of Service Operations

1 Customer Participation

 For the customer, service is an experience

occurring in the front office of the service facility, and the quality of service is enhanced

if the service facility is designed from the customer’s perspective.

 An important consideration in providing a

service is the realization that the customer can play an active part in the process.

 Taking the customer out of the process,

however, is becoming a common practice.

Distinctive Characteristics of Services Operations

2 Intangibility (I)

 Services are ideas and concepts; products are things

 Therefore, it follows that service innovations are not patentable

 To secure the benefits of a novel service concept, the firm must expand extremely rapidly and preempt any competitors

 Franchising has been the vehicle to secure market areas and establish a brand name Franchising allows the parent firm to sell its idea to a local entrepreneur, thus preserving capital while retaining control and

reducing risk

Distinctive Characteristics of Services Operations

2 Intangibility (I) (cont’)

 When buying a product, the customer is able to see it,

feel it, and test its performance before purchase

 For a service, however, the customer must rely on the

reputation of the service firm

In many service areas, the government has intervened to guarantee acceptable service performances

 Through the use of registration, licensing, and

regulation, the government can assure consumers that the training and test performance of some service

providers meet certain standards

 In its efforts to “protect” the consumer, however, the

government may be stifling innovation, raising barriers

to entry, and generally reducing competition

Distinctive Characteristics of Services Operations

3 Heterogeneity (H)

 The combination of the intangible nature of

services and the customer as a participant in the service delivery system results in variation

of service from customer to customer

 The interaction between customer and

employee in services, however, creates the possibility of a more satisfying human work experience.

 In services, work activity generally is oriented

toward people rather than toward things

Distinctive Characteristics of Services Operations

3 Heterogeneity (H) (cont’)

 In the limited customer-contact service industries, we

now see a dramatic reduction in the level of labor intensiveness through the introduction of self-service technology

 Even the introduction of automation may strengthen

personalization by eliminating the relatively routine impersonal tasks, thereby permitting increased

personal attention to the remaining work

At the same time, personal attention creates opportunities for variability in the service that is provided

This is not inherently bad, however, unless customers perceive a significant variation in quality

Distinctive Characteristics of Services Operations

3 Heterogeneity (H) (cont’)

 A customer expects to be treated fairly and to be given the same service that others receive

 The development of standards and of employee

training in proper procedures is the key to ensuring consistency in the service provided

 It is rather impractical to monitor the output of each

employee, thus, customers play a role in quality control through their feedback

 The direct customer–employee contact has

implications for service (industrial) relations as well

 “In the service business you can’t make happy guests

with unhappy employees.”

Distinctive Characteristics of Services Operations

4 Simultaneity/ Inseparability (I)

 The fact that services are created and consumed

simultaneously and, thus, cannot be stored is a critical feature in the management of services

 The manufacturing facility can be operated at a

constant level of output that is most efficient The factory is operated as a closed system, with inventory decoupling the productive system from customer

Distinctive Characteristics of Services Operations

4 Simultaneity/ Inseparability (cont’)

 Services, however, operate as open systems , with the

full impact of demand variations being transmitted to the system

For services, the decoupling is achieved through customer waiting, “queuing”

The problems of selecting service capacity, facility utilization, and use of idle time all are balanced

against customer waiting time

 The simultaneous production and consumption in

services eliminates many opportunities for control intervention

quality-A product can be inspected before delivery, but services must rely on other measures to ensure the quality of services delivered

Distinctive Characteristics of Services Operations

5 Perishability (P)

 A service is a perishable commodity.

 Because a service cannot be stored, it is lost

forever when not used.

 The full utilization of service capacity becomes

a management challenge, because customer demand exhibits considerable variation and building inventory to absorb these fluctuations

is not an option.

Distinctive Characteristics of Services Operations

5 Perishability (P) (cont’)

 Faced with variable demand and a

time-perishable capacity to provide the service, the manager has 3 basic options:

a Smooth demand by:

 Using reservations or appointments.

 Using price incentives (e.g., giving telephone discounts for evening and weekend calls).

 Demarketing peak times (e.g., advertising to shop early and avoid the Christmas rush).

Distinctive Characteristics of Services Operations

5 Perishability (P) (cont’)

The manager has 3 basic options (con’t):

b Adjust service capacity by:

Using part-time help during peak hours

Scheduling work shifts to vary workforce needs according to demand (e.g., telephone companies staff their operators to match call demand)

Increasing the customer self-service content of the service

c Allow customers to wait

Distinctive Characteristics of Services Operations

6 Non-transferrable Ownership

 From a marketing perspective, services, unlike goods,

do not involve transfer of ownership

One view is that customers gain access or rental of resources for a period of time

 Service industries share their resources among

customers by allocating the use of them

 Customers do not purchase an asset but, instead,

have use of the asset for a specific time, whether it is the use of human labor (e.g., dentist), technology

(e.g., cellular network), or a physical asset (e.g., theme park)

Distinctive Characteristics of Services Operations



The Service Package

 Service managers have difficulty describing their

product This problem is partly a result of the

intangible nature of services, but it is the

presence of the customer in the process that

creates a concern for the total service

experience.

 The service package is defined as a bundle of

goods and services with information that is

provided in some environment.

The Service Package

 This bundle consists of the following 5 features:

be in place before a service can be offered

Ex: golf course, hospital, airplane.

consumed by the buyer, or items provided by the

consumer

Ex: golf clubs, medical supplies, airline seats

provided by the customer to enable efficient and

customized service

Ex: golf season, patient medical records, seats available on

a flight

The Service Package

4 Explicit Services: Benefits readily observable

by the senses The essential or intrinsic features Ex: golf fanatic, diagnostic value, on-time departure

5 Implicit Services : Psychological benefits or

extrinsic features which the consumer may

sense only vaguely

Ex: golf fan, nursing skills, security of a well lighted

parking lot

The Service Package

The Service Package

Grouping Services by Delivery Process

 Concepts of service management should be

applicable to all service organizations.

 To demonstrate that management problems are

common across service industries, Roger

Schmenner (1986) proposed the service process matrix

 Services are classified across two dimensions

that significantly affect the character of the service delivery process

Grouping Services by Delivery Process

Grouping Services by Delivery Process

degree of labor intensity , which is defined

as the ratio of labor cost to capital cost.

 The horizontal dimension measures the

degree of customer interaction and

customization , which is a marketing

variable that describes the ability of the

customer to affect personally the nature of

the service being delivered

Grouping Services by Delivery Process

 Service factories provide a standardized service

with high capital investment, much like a line-flow manufacturing plant.

 Service shops permit more service

customization, but they do so in a high-capital

environment.

 Customers of a mass service will receive an

undifferentiated service in a labor-intensive

environment, but those seeking a professional

service will be given individual attention by highly trained specialists.

Grouping Services by Delivery Process

Classifying Services for Strategic Insights

 Strategic insights that transcend industry

boundaries are needed

 Nature of the Service Act

 The service act can be considered across two

dimensions: who or what is the direct recipient of the service, and the tangible nature of the service

 Thinking creatively about the nature of the service

may identify more convenient forms of delivery or even a product that can substitute for the service

 This creates 4 possible classifications

Classifying Services for Strategic Insights

Direct Recipient of the Service Nature of

the Service Act People Things

People’s bodies:

Health care Passenger transportation Beauty salons

Exercise clinics Restaurants

Physical possessions: Freight transportation

Repair and maintenance Veterinary care

Janitorial services Laundry and dry cleaning

Tangible actions

People’s minds:

Education Broadcasting Information services Theaters

Museums

Intangible assets:

Banking Legal services Accounting Securities Insurance Intangible actions

Classifying Services for Strategic Insights

 Relationship with Customers

 Service firms have the opportunity to build

long-term relationships because customers conduct their transactions directly with the service provider, most often in person

 In contrast, manufacturers traditionally have

been isolated from the eventual end user by a distribution channel consisting of some

combination of distributors, wholesalers, and/or retailers

Classifying Services for Strategic Insights

 Relationship with Customers

 Knowing your customers is a significant competitive advantage for a service

organization.

 Having a database of customers’ names and addresses and their use of the service permits targeted marketing and individual treatment of customers.

Customers benefit from membership because of the convenience of annual fixed fees and the

knowledge that they are valued customers who will receive occasional perks (e.g., frequent flyer

awards)

Classifying Services for Strategic Insights

Type of Relationship between Service Organization and Its Customers

Relationship with

Customers “Membership” relationship No formal relationship

Insurance Telephone subscription Electric Utility

Banking

Radio station Police protection Lighthouse

Restaurant Pay phone Toll highway Movie theater Public transportation Discrete

transactions

Classifying Services for Strategic Insights

 Customization and Judgment

 Because services are created as they are consumed

and the customer is often a participant in the process,

an opportunity exists to tailor a service to the needs of the customer

 Customization proceeds along 2 dimensions: either

the character of the service permits customization, or the service personnel have the discretion to modify the service

Within a particular industry, every quadrant could

be occupied by different segments of that industry

A strategic choice of offering more customization and allowing service personnel to exercise

judgment, however, has implications for the service delivery system

Classifying Services for Strategic Insights

Extent to Which Service Characteristics Are Customized Extent to Which

Personnel Exercise

Judgment in Meeting

High Surgery Taxi services

Gourmet restaurant

Preventive health programs Education (large classes) Family restaurant

Low

Telephone service Hotel services

Retail banking Cafeteria

Public transportation Spectator sports Movie theater Institutional food service

Classifying Services for Strategic Insights

 Nature of Demand and Capacity

 The time perishability of service capacity

creates a challenge for service managers because these managers lack the option of producing and storing inventory for future sale

 Even so, the extent of demand and supply

imbalances varies across service industries

Classifying Services for Strategic Insights

 Nature of Demand and Capacity

 To determine the most appropriate strategy in each case, it is necessary to consider the following

questions:

1.What is the nature of the demand fluctuation? Does it have a predictable cycle (e.g daily meal demand at a fast-food restaurant) that can be anticipated?

2.What are the underlying causes of these fluctuations in demand? If the causes are customer habits or

preference, could marketing produce a change?

3.What opportunities exist to change the level of capacity or supply? Can part-time workers be hired during peak hours?