E-Business in the Services
Sectors
Week 1: Introduction and
Background to the Services
Sectors
Course Aim
aThe overall aim of this module is to
provide the student with an appreciation
of the development of E-Business in the
services sector. The module examines
the strategic implications of the rapid
diffusion of E-Business in the services
sector and the key competitive issues
facing services companies’ E-Business
activities.
Course Objectives
On successful completion of the module,
students should be able to:
a demonstrate a knowledge of the growth and
development of e-business with reference to the
services sector
a describe the main types of service sector Internet
models
a analyse and evaluate the main competitive forces
impacting on service companies’ E-Business activities
Course Objectives
On successful completion of the module,
students should be able to:
ademonstrate that they have gained
competencies in developing online
business activities
ademonstrate that they have developed
communication and presentation skills
Learning Outcomes
By the end of the lecture, and having
studied the recommended reading,
students should be able to
adiscuss the key characteristics of services
aexplain how the key characteristics of
services may be managed on the Web
The Importance of the
Services Sector
a“One of the most significant
developments of the 1990s in the
globalising economy is the identification of
the service industries as the fastest
increasing component of multinational
enterprise (MNE) activity in both
developing and developed countries.”
(Dunning, 1993)
Global Growth in the
Services Sector
aThe world trade in services, which is growing
faster than the world trade in goods, represents
25 percent of the total value of global trade
(Kotabe et al 1998).
aThe dramatic increase in the trade of services in
the last decade has been predominantly due to
government deregulation and technological
advances in data processing and
telecommunications.
Services Sectors
aThe services sectors are very diverse and
range from knowledge and information
intensive areas, performed in both public
and private sector organisations, to very
basic services such as cleaning and
maintenance. Also included are retail,
wholesale, construction, transportation,
communication, professional, insurance,
tourist, educational and health care
(Dicken, 1998).
The Role of Services in an
Economy
aBusiness Services - consulting, finance, banking
aTrade Services - retailing, maintenance and
repair
aInfrastructure Services - communications,
transport
aSocial/Personal Services - restaurants, health
care
aPublic Administration - education, government
Services: Some Definitions
a‘A service is an activity or series of
activities of more or less intangible nature
that normally, but not necessarily, take
place in interactions between the
customer and the service employee
and/or physical resources or goods and/or
systems of the service provider, which are
provided as solutions to customer
problems.’ Gronroos (1990)
Services: Some Definitions
a‘Services are something which can be
bought and sold but which you can not
drop on your foot’. Gummesson (1987)
Services: Some Definitions
a‘A service is any act or performance that
one party can offer to another that is
essentially intangible and does not result
in the ownership of anything. Its
production may or may not be tied to a
physical product’. (Kotler, 1997)
Services: Some Definitions
aU.S. Census Bureau (2001):
`‘Service industries are those domestic
establishments providing services to
consumers, businesses, governments and
other organisations’.
Characteristics of Services
aIntangibility
aPerishability
aInseparability
aVariability
aOwnership
Services: Ways to Reduce
Intangibility
aPlace, the physical setting in which the
services are provided
aPeople, the point of contact between the
customer and the organisation
aEquipment, which must be of the
necessary standard to assist rapid and
efficient service provision
Goods/Service Continuum
aPurely tangible goods
aTangible goods with accompanying
services
aA major service with accompanying goods
and services
aPure services (Kotler, 1991)
Goods/Service Continuum
Wilson (1972) suggests that the classification should
rest on the services relationship to tangible goods
and describes three levels of services:
a Services that make available a tangible, e.g. retail
outlets
a Services providing added value to a tangible product,
e.g. dry cleaning, repairs, personal care, insurance
a Services that provide pure intangibles, e.g.
auctioneering, museums, employment agencies,
entertainment, education, travel agencies
Goods/Service Continuum
a Distinction between goods and services being eroded
a Amazon has successfully positioned itself as a service
provider rather than a book retailer through its reviews,
and book suggestion service
a Boston-based Streamline.com offer - for $30 a month, a
regular housekeeping service, which includes dry
cleaning, video rental, pizza delivery and photo
processing in addition to grocery delivery
The Service Package
aSupporting facility - the physical resources
that must be in place before a service can
be offered, e.g. airplane, golf course etc.
aFacilitating goods - the material
purchased or consumed by the buyer
aExplicit services - readily observable
aImplicit services - psychological benefits
The Competitive
Environment of Services
aRelatively low overall entry barriers
aHigh transportation costs
aErratic sales fluctuations
aCustomer Loyalty
Winning Customers in the
Marketplace
aAvailability
aConvenience
aDependability
aPersonalisation
aPrice
aQuality
aReputation
aSafety
aSpeed
Electronic Services
aE-services
`A variety of electronic interactions ranging
from basic services, such as the delivery of
news and stock quotes, to smart services,
such as the delivery of emergency services
(Chidambaram, 2001).
Why E-Services?
aEnhances quality control
alow cost - helps to fulfil customer
demands and reduce service costs
aCustomer convenience
aPotential for wide distribution
E-Services
aPure EC – where the product, the agent and the
process are all digital
aTrading of products – pure EC only possible
where the product can be digitised, such as in
selling software or music
aPotential advantages the greatest with pure PC,
since automating the entire process can result in
a substantial cost reduction
E-Services
aWhere the service industry is concerned
pure EC can be used in most cases so that
the savings are much larger than in selling
most physical products
aService companies started to sell online
even before the Internet, e.g. banks,
estate agents
E-Services: Challenges
aLack of control of electronic environment
(technical/security issues)
aAbility to customise?
aCustomer involvement
Topics for Discussion
aWhat are the characteristics of services
that will be affected most by the emerging
electronic and communications
technologies?
aHow can e-businesses manage the
difficulties traditionally associated with
service marketing (illustrate with
examples)?