11

Service ManagementService Management

Ch. 2, The Nature of Services

22

Learning Objectives

1. Service-product ervice-product bundlebundle..

2. Distinctive characteristics of service operation

3. Non-ownershipNon-ownership classification of services classification of services

4. Service package: five dimensions

5. Service process matrix: four categories

6. Strategic classification of services

7. Service manager: open-systems view

33

1. Service/Product Bundle1. Service/Product BundleElementElement Goods Goods

e.g.e.g.

Service Service

e.g.e.g.

BusinessBusiness Custom clothierCustom clothier Business hotelBusiness hotel

CoreCore Business suitsBusiness suits Room for the Room for the nightnight

PeripheralPeripheral

GoodsGoods

Garment bagGarment bag Bath robeBath robe

PeripheralPeripheral

ServiceService

Deferred payment Deferred payment plansplans

In house In house restaurantrestaurant

VariantVariant Coffee loungeCoffee lounge Airport shuttleAirport shuttle

44

2. Unique Characteristics of Services

Customer Participation: co-productionSimultaneity: interaction creates customer perceptions of qualityPerishability: cannot inventory, opportunity loss of idle capacity, need to match supply with demandIntangibility: importance of reputationHeterogeneity: customer participation in delivery process results in variability

55

3. Non-ownership Classification of Services3. Non-ownership Classification of ServicesType Type Customer valueCustomer value ExamplesExamples Mgt ChallengeMgt Challenge

Goods rentalGoods rental Obtain temporary Obtain temporary right right

to exclusive useto exclusive use

VehiclesVehicles Site selection Site selection & Maintenance& Maintenance

Place and Place and space rentalspace rental

Obtain exclusive use Obtain exclusive use ofof defined portiondefined portion

Hotel room, Hotel room, seat on airplaneseat on airplane

HousekeepingHousekeeping

Labor and Labor and ExpertiseExpertise

Hire other people Hire other people to do a jobto do a job

Car repair, Car repair, management management

consultingconsulting

time is perishabletime is perishable

Physical Physical facility facility usageusage

Gain admission to a Gain admission to a facility for a period facility for a period

of timeof time

Theme parkTheme park QueuingQueuing

Network usageNetwork usage Gain access to Gain access to participate participate

internetinternet Availability Availability && pricing pricing

66

4. The Service PackageSupporting Facility: golf course, ski lift, airplane.Facilitating Goods: legal documents, golf clubs, medical supplies.Information: seats available on a flight, location of customer to dispatch a taxi.Explicit Services: quality of meal, attitude of the waiter, on-time departure.Implicit Services: privacy of loan office, security of a well lighted parking lot.

77

5. The Service Process Matrix

Low High Service factory: Service shop: * Airlines * Hospitals Low * Trucking * Auto repair * Hotels * Other repair services Mass service: Professional service: * Retailing * Physicians High * Wholesaling * Lawyers * Schools * Accountants

Degree Degree of Interaction and Customization

of labor Intensity

88

6. Strategic Service Classification 16. Strategic Service Classification 1 Direct Recipient Service Act People Things People’s bodies: Physical possessions: Health care Freight transportation Passenger transportation Equipment repair and maintenanceTangible actions Beauty salons Veterinary care Exercise clinics Restaurants People’s minds: Intangible assets: Education BankingIntangible actions Broadcasting Legal services Information services Accounting Theaters Securities Museums Insurance

Laundry and dry cleaning

99

6. Strategic Service Classification 26. Strategic Service Classification 2

Relationship between Service Organization and Customers

Service Delivery “Membership” No formal relationship

Insurance Radio station Telephone subscription Police protectionContinuous delivery Electric Utility Lighthouseof service Banking Public Highway Long-distance phone calls Restaurant Theater series subscription Pay phoneDiscrete transactions Transit pass Toll highway Sam’s Wholesale Club Movie theater Airline frequent flyer Public transportation

1010

6. Strategic Service Classification 36. Strategic Service Classification 3 Customized

Judgment High Low

Professional services Education (large classes)

Surgery Preventive health programs Taxi services Family restaurant Gourmet restaurant

Telephone service Public transportation Hotel services Spectator sport Retail banking Movie theater Cafeteria Institutional food service

High

Low

1111

6. Strategic Service Classification 46. Strategic Service Classification 4 Demand Fluctuation over TimeSupply 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

1212

6. Strategic Service Classification 56. Strategic Service Classification 5

Availability of Service OutletsNature of Interaction 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 arm’s length Local TV station Telephone company

1313

7. Open Systems View 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 Facilitating goods Communicate Information Basis of by advertising Explicit services selection Implicit services

1414

Topics for Discussion

What 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?

1515

Interactive Class ExerciseInteractive Class Exercise

The class breaks into five groups and each The 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, classifications (e.g., nature of act, relationship with customer, customization, relationship with customer, customization, nature of demand, or method of delivery) to nature of demand, or method of delivery) to come up with an example for each of the four come up with an example for each of the four quadrants in the matrix. quadrants in the matrix.

casecase ：： Southwest Airlines(P.30)Southwest Airlines(P.30)