8/6/2019 Chap 02 Nature

1/12

Chapter 2

The Nature of Services

8/6/2019 Chap 02 Nature

2/12

Learning Objectives

1. Service process matrix.

2. The service package.

3. Distinctive characteristics of a serviceoperation.

4. The strategic classification of services.

5. The role of a service manager from an open-

systems view of service.

8/6/2019 Chap 02 Nature

3/12

Service/Product BundleService/Product Bundle

ElementElement Core CoreGoodsGoods

ExampleExample

CoreCoreServiceService

ExampleExample

BusinessBusiness Custom clothier Custom clothier Business hotel Business hotel

CoreCore Business suits Business suits Room for the night Room for the night

PeripheralPeripheral

GoodsGoods

Garment bagGarment bag Bath robe Bath robe

PeripheralPeripheral

ServiceService

Deferred paymentDeferred payment

plansplans

In house restaurantIn house restaurant

VariantVariant Coffee lounge Coffee lounge Airport shuttle Airport shuttle

8/6/2019 Chap 02 Nature

4/12

The Service Process Matrix

Degree of Interaction and Customization Low High

Service factory: Service shop:

* Airlines * Hospitals

Low * Trucking * Auto repair* Hotels * Other repair services

* Resorts/ recreation

Degree

of labor Intensity Mass service: Professional service:* Retailing * Doctors

High * Wholesaling * Lawyers

* Schools * Accountants

* Retail aspects of * Architects

commercial banking

8/6/2019 Chap 02 Nature

5/12

The Service Package

1. Supporting Facility

Examples are golf course, ski lift, hospital, airplane.

2. Facilitating Goods

Examples are food items, legal documents, golf clubs, medical history.3. Information

Examples are patient medical records, seats available on a flight, customerpreferences, location of customer to dispatch a taxi.

4. Explicit Services

Examples are quality of meal, attitude of the waiter, on-time departure.

5. Implicit Services

Examples are privacy of loan office, security of a well lighted parking lot.

8/6/2019 Chap 02 Nature

6/12

Distinctive Characteristics of Services

Customer Participation

Simultaneity

Perishability

Intangibility

Heterogeneity

8/6/2019 Chap 02 Nature

7/12

Strategic Service Classification (Nature of

the Service Act)

Strategic Service Classification (Nature of

the Service Act)Direct Recipient of the ServiceNature of

the Service Act People Things

Peoples 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

Peoples minds: Intangible assets:

Education BankingIntangible actions Broadcasting Legal services

Information services Accounting

Theaters Securities

Museums Insurance

8/6/2019 Chap 02 Nature

8/12

Strategic Service Classification

(Relationship with Customers)

Strategic Service Classification

(Relationship with Customers)Type of Relationship between Service Organization and Its CustomersNature 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 transactions Transit pass Toll highwaySams Wholesale Club Movie theater

Airline frequent flyer Public transportation

8/6/2019 Chap 02 Nature

9/12

Strategic Service Classification

(Customization and Judgment)

Strategic Service Classification

(Customization and Judgment)Extent to Which Service Characteristics Are CustomizedExtent 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

8/6/2019 Chap 02 Nature

10/12

Strategic Service Classification (Nature of

Demand and Supply)

Strategic Service Classification (Nature of

Demand and Supply)Extent of Demand Fluctuation over TimeExtent to which Supply

Is Constrained Wide Narrow

Electricity Insurance

Peak demand can Telephone Legal services

usually be met Police emergency Banking

without a major delay Hospital maternity unit Laundry and dry cleaning

Tax preparation Fast food restaurant

Peak demand regularly Passenger transportation Movie theater

exceeds capacity Hotels and motels Gas station

8/6/2019 Chap 02 Nature

11/12

Strategic Service Classification (Method of

Service Delivery)

Strategic Service Classification (Method of

Service Delivery)Availability of Service OutletsNature of Interaction

between Customer and

Service Organization Single site Multiple site

Customer travels to Theater Bus service

service organization Barbershop Fast-food chain

Service provider Taxi Mail delivery

travels to customer Pest control service AAA emergency repairs

Transaction is at Credit card company Broadcast network

arms length Local TV station Telephone company

8/6/2019 Chap 02 Nature

12/12

Open Systems View of 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 Empowerment

Location demand Marketing function: supply Training

Interact with consumers Attitudes

Control demand

Modify as necessary

Define standard

Service package

Supporting facility

Communicate Facilitating goods Basis of

by advertising Explicit services selection

Implicit services