Download - Topic 1 the New Frontier
Service: The New FrontierService: The New Frontier
Welcome toWelcome to
Service ManagementService Management
Professor Drew RosenProfessor Drew Rosen
Learning ObjectivesLearning Objectives
Describe the central role of services in an economy.Describe the central role of services in an economy.
To explore the differences between manufacturing and To explore the differences between manufacturing and services.services.
Explore the role of services within manufacturing and Explore the role of services within manufacturing and manufacturing’s reliance on services.manufacturing’s reliance on services.
Understanding service management/service operationsUnderstanding service management/service operations
Describe and contrast the features of the new experience Describe and contrast the features of the new experience economy with that of previous economies.economy with that of previous economies.
Service DefinitionsService Definitions
A Service is a Time-perishable, Intangible A Service is a Time-perishable, Intangible Experience Performed for a Customer Acting Experience Performed for a Customer Acting in the Role of a Coproducer.in the Role of a Coproducer.
James FitzsimmonsJames Fitzsimmons
Services are deeds, processes, and Services are deeds, processes, and performances.performances.
Valarie Zeithaml & Mary Jo Valarie Zeithaml & Mary Jo BitnerBitner
Definition of Service FirmsDefinition of Service Firms
Service Enterprises are Organizations that Service Enterprises are Organizations that Facilitate the Production and Distribution of Facilitate the Production and Distribution of Goods, Support Other Firms in Meeting Goods, Support Other Firms in Meeting Their Goals, and Their Goals, and Add ValueAdd Value to Our Personal to Our Personal Lives.Lives.
James James FitzsimmonsFitzsimmons
Stages of Economic Stages of Economic DevelopmentDevelopment
FeaturesFeatures
Pre- Use of StandardPre- Use of Standard
dominant human Unit of of living dominant human Unit of of living
Society Game activity labor social life measure Structure TechnologySociety Game activity labor social life measure Structure Technology
Pre- Against Agriculture Raw Extended Sub- Routine Simple handPre- Against Agriculture Raw Extended Sub- Routine Simple hand
Industrial Nature Mining muscle household sistence Traditional toolsIndustrial Nature Mining muscle household sistence Traditional tools
power Authoritative power Authoritative
Industrial Against Goods Machine Individual Quantity Bureaucratic Machines Industrial Against Goods Machine Individual Quantity Bureaucratic Machines
fabricated production tending of goods Hierarchical fabricated production tending of goods Hierarchical
naturenature
Post- Among Services Artistic Community Quality of Inter- InformationPost- Among Services Artistic Community Quality of Inter- Information
industrial Persons Creative life in terms dependentindustrial Persons Creative life in terms dependent
Intellectual of health, GlobalIntellectual of health, Global
education,education,
recreation recreation
The Service Revolution
“There are no such things as serviceindustries. There are only industries whose service components are greater or less then those of other industries. Everybody is in service”!
Theodore Levitt
Services DefinedServices Defined
Service IndustryService Industry Customer ServiceCustomer Service Field ServiceField Service
“When the quality and price of competingproducts are similar or nearly identical,service activities can ‘differentiate’undifferentiated products in the mind ofthe customer”
Glaskowsky et al.
Relative Importance of Service Activities
Relative Importance of Marketing Variables
ProductPriceServiceSales EffortTOTAL
All
Indust
ries
All M
an
ufa
ctu
rin
g
Chem
icals
&Pla
stic
s M
fg.
Food M
fg.
36232318100
38242018100
38261818100
36271522100
Ele
ctro
nic
s M
fg.
Paper
Mfg
.
All
Oth
er
Manufa
cturi
ng
48142216100
29262421100
38252215100
All M
erc
han
dis
ing
Consu
mer
Goods
Merc
handis
ing
Indust
rial G
oods
Merc
handis
ing
30222721100
31232323100
28173916100
National Council of Physical Distribution Management
Parallel Product/Service DesignParallel Product/Service Design
ProductConcept
Product Design
ProductDelivery
ServiceConcept
ServiceDesign
ServiceDelivery
SuppliersTier 2
SuppliersTier 1
Manufacturing
Inbound Logistics
Operations
Outbound Logistics
CUSTOME
RS
DistributorsRetailers
The Supply Chain
Information
Manufacturing
ServiceIntermediary
CommercialServices User(Self-Service)
Consumer(Self-Service)
R & D
ProductDesign
DistributionServices
WholesalingRetailingRepairing
Service IndustriesCommunications, Transportation,
Utilities, Health Care, Banking, etc.
Private Business ServicesSupporting Manufacturing,
Accounting, Legal, Consulting, Software, Maintenance
Government Support ServicesWaste Disposal Services, Road Maintenance,
Education, Health Support, Standards,Police and Fire Protection, etc.
Services Inside theCompany--Design, Legal, AccountingAdvertising, etc.
Service and ProfitabilityService and Profitability
Reduced operating expensesReduced operating expenses Competitive differentiationCompetitive differentiation Increased qualityIncreased quality Increased efficiencyIncreased efficiency Increased responsivenessIncreased responsiveness Increased market ShareIncreased market Share Increased customer loyaltyIncreased customer loyalty
Contributors to Market Share
MarketShare
Time
Market ShareDue to
Product Features
Market ShareDue to
Captive Markets
Market ShareDue to
Service Activities
1 2 3 4 5
20%
40%
60%
80%
100%
Verydissatisfied
Dissatisfied Neutral Satisfied Very satisfied
Loyalt
y (
Rete
nti
on
)
Satisfaction
zone of defection
zone of indifference
zone of affection
Satisfaction and Loyalty
terrorist
apostle
The New Experience EconomyThe New Experience Economy
Economy Agrarian Industrial Service Experience
Function Extract Make Deliver Stage
Nature Fungible Tangible Intangible Memorable
Attribute Natural Standardized Customized Personal
Method ofsupply
Stored inbulk
Inventoried Deliveredon demand
Revealedover time
Seller Trader Manufacturer Provider Stager
Buyer Market User Client Guest
The Four Realms of an ExperienceThe Four Realms of an Experience
Customer Participation
Passive Active
EnvironmentalAbsorption Entertainment
(Movie)Education(Language)
Relationship Immersion Esthetic(Tourist)
Escapist(Skydiving)
Experience Design PrinciplesExperience Design Principles
Theme the Experience (Forum shops)Theme the Experience (Forum shops) Harmonize Impressions with Positive CuesHarmonize Impressions with Positive Cues
(Fort Lauderdale airport parking garage)(Fort Lauderdale airport parking garage) Eliminate Negative CuesEliminate Negative Cues
(Cinemark talking trash containers)(Cinemark talking trash containers) Mix in Memorabilia (Hard Rock T-shirts)Mix in Memorabilia (Hard Rock T-shirts) Engage all Five Senses (Mist in Rainforest)Engage all Five Senses (Mist in Rainforest)
Role of the Service ManagerRole of the Service Manager
Entrepreneurial InnovationEntrepreneurial Innovation Capitalizing on Social TrendsCapitalizing on Social Trends Management ChallengesManagement Challenges
Economies of Scale (MRI scanner)Economies of Scale (MRI scanner)Economies of Scope(Convenience store)Economies of Scope(Convenience store)Complexity (Yield Management)Complexity (Yield Management)Boundary Crossing (Bank vs Brokerage)Boundary Crossing (Bank vs Brokerage)International Competitiveness(Diversity) International Competitiveness(Diversity)
Profits are the result of attention to quality and customer satisfaction, while the reverse is rarely true.
Edwards Deming
Discussion TopicsDiscussion Topics
Is it possible for an economy to be based Is it possible for an economy to be based entirely on services?entirely on services?
Speculate on the effect that the Internet will Speculate on the effect that the Internet will have on the delivery of services.have on the delivery of services.
What is the value of self-service in an What is the value of self-service in an economy? What are the implications?economy? What are the implications?
Comment on the role that marketing plays Comment on the role that marketing plays in the service innovation process.in the service innovation process.
Illustrate how the type of work he or she Illustrate how the type of work he or she does influences a persons lifestyle.does influences a persons lifestyle.