Service Management
Ch. 2, The Nature of Services
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Learning Objectives
1. Service-product bundle.
2. Distinctive characteristics of service operation
3. Non-ownership 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
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1. Service/Product Bundle
Element
Goods
e.g.
Service
e.g.
Business
Custom clothier
Business hotel
Core
Business suits
Peripheral
Goods
Peripheral
Service
Variant
Garment bag
Room for the
night
Bath robe
Deferred payment In house
plans
restaurant
Coffee lounge
Airport shuttle
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2. Unique Characteristics of Services
Customer Participation: co-production
Simultaneity: interaction creates customer
perceptions of quality
Perishability: cannot inventory, opportunity
loss of idle capacity, need to match supply
with demand
Intangibility: importance of reputation
Heterogeneity: customer participation in
delivery process results in variability
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3. Non-ownership Classification of Services
Type
Customer value
Examples
Mgt Challenge
Goods rental
Obtain temporary
right
to exclusive use
Vehicles
Site selection
& Maintenance
Place and
space rental
Obtain exclusive use
of defined portion
Hotel room,
seat on airplane
Housekeeping
Labor and
Expertise
Hire other people
to do a job
Car repair,
management
consulting
time is perishable
Physical
facility
usage
Gain admission to a
facility for a period
of time
Theme park
Queuing
internet
Availability
& pricing
Network usage Gain access to
participate
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4. The Service Package
Supporting 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.
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5. The Service Process Matrix
Degree
of labor Intensity
Degree of Interaction and Customization
Low
High
Low
Service factory:
* Airlines
* Trucking
* Hotels
Service shop:
* Hospitals
* Auto repair
* Other repair services
High
Mass service:
* Retailing
* Wholesaling
* Schools
Professional service:
* Physicians
* Lawyers
* Accountants
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6. Strategic Service Classification 1
Direct Recipient
Service Act
People
Things
People’s bodies:
Physical possessions:
Health care
Passenger transportation
Tangible actions
Beauty salons
Exercise clinics
Restaurants
Freight transportation
Equipment repair and
maintenance
Veterinary care
People’s minds:
Education
Intangible actions Broadcasting
Information services
Theaters
Museums
Laundry and dry cleaning
Intangible assets:
Banking
Legal services
Accounting
Securities
Insurance
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6. Strategic Service Classification 2
Relationship between Service Organization and Customers
Service Delivery
Continuous delivery
of service
“Membership”
Insurance
Telephone subscription
Electric Utility
Banking
Long-distance phone calls
Theater series subscription
Discrete transactions Transit pass
Sam’s Wholesale Club
Airline frequent flyer
No formal relationship
Radio station
Police protection
Lighthouse
Public Highway
Restaurant
Pay phone
Toll highway
Movie theater
Public transportation
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6. Strategic Service Classification 3
Customized
Judgment
High
Low
High
Low
Professional services
Surgery
Taxi services
Gourmet restaurant
Education (large classes)
Preventive health programs
Family restaurant
Telephone service
Hotel services
Retail banking
Cafeteria
Public transportation
Spectator sport
Movie theater
Institutional food service
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6. Strategic Service Classification 4
Demand Fluctuation over Time
Supply
Is Constrained
Peak demand can
usually be met
without a major delay
Wide
Narrow
Electricity
Insurance
Telephone
Legal services
Police emergency
Banking
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
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6. Strategic Service Classification 5
Availability of Service Outlets
Nature of Interaction
Single site
Multiple site
Customer travels to
service organization
Theater
Barbershop
Bus service
Fast-food chain
Service provider
travels to customer
Taxi
Pest control service
Mail delivery
AAA emergency repairs
Transaction is at
arm’s length
Credit card company
Local TV station
Broadcast network
Telephone company
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7. Open Systems View
Service Process
Consumer participant
Consumer-Provider
interface
Consumer arrivals
(input)
Control
Consumer
departures
( output)
Evaluation
Criteria
Measurement
Monitor
Customer demand
Service operations manager
Production function:
Perceived needs Alter
Monitor and control process
Location
demand Marketing function:
Interact with consumers
Control demand
Service personnel
Schedule
supply
Empowerment
Training
Attitudes
Modify as necessary
Define standard
Communicate
by advertising
Service package
Supporting facility
Facilitating goods
Information
Explicit services
Implicit services
Basis of
selection
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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?
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Interactive Class Exercise
The class breaks into five groups and each
group is assigned one of the service
classifications (e.g., nature of act,
relationship with customer, customization,
nature of demand, or method of delivery) to
come up with an example for each of the four
quadrants in the matrix.
case：Southwest Airlines(P.30)
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