CHAPTER 1 INTRODUCTION TO SERVICES

1. Definition of service

2. Characteristics of services

3. Framing service: The Servuction Model

4. Why study services?

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OBJECTIVES

1. Describe what kind of businesses are classified as services

2. Identify the characteristics of services

3. Understand the 8Ps of integrated service management

4. Classify the service experience

5. Recognize the major changes occurring in the service sector

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DEFINITION OF SERVICE

An act or performance offered by one party to another (performance are intangible, but may involve use of physical product)

An economic activity that does not result in ownership

A process that creates benefits by facilitating a desired change in customers, physical possessions or intangible assets

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Service Sector

Includes businesses, government

agencies, nonprofits

Jobs range from high-paid professionals and

technicians to minimum-wage

positions

Service organizations can be any size--from

huge global corporations to local

small businesses

In most countries, adds more economic value than agriculture, raw materials

and manufacturing combined

In Malaysia -- services account for

54% of GDP that constitute the

largest.

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Service Sector 2010

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Industries in service sector

Banking Lodging

Restaurants, catering,

insurance, news & entertainment

Transportation Healthcare Education

Wholesale and retailing

Laundries, dry cleaning

Repairs & maintenance

Professional (law, architecture, consulting) 6

Take a moment

Can you think any example of service that you have consumed last

week?

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Some examples

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Terms

Goods Objects, devices,

or things

Services Deeds, efforts or

performance

Product Either a good or a service

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Dominance of tangible versus intangible elements in goods & services

Tangible dominant

product that posses physical properties that can be felt, tasted and seen prior a to the consumers purchase decision

Intangible dominant

Product that lack the physical properties that can be sense by consumers prior to the purchase decision

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Basic differences between goods and services

No ownership of service

Service products are intangible performances not objects

Customer often actively involve in production process

Other people may form part of the product experience

More variability in operational inputs and outputs harder to improve productivity, control quality

Often difficult for customer to evaluate

Typically cannot be produced in advance for inventory

Time factor is more important speed may be the key

Delivery systems include electronic and physical channels 11

Product elements Place, cyberspace, and time

Process People

Promotion and education

Physical evidence Price and other user outlays

The 8Ps of Integrated Service Management

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The Servuction Model (the service experience)

Model used to illustrate factors that influence service experience, including those that are visible and invisible to consumer.

Invisible component consists of invisible organizations and systems.

Visible part consists of 3 parts:

Inanimate environment,

Contact personnel/service providers,

Other consumers.

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Servuction model demonstrates

consumers are an integral part of service

process.

Participation may be active or passive, but

always there.

Managers must understand interactive nature of services and customer involvement in production process.

Inanimate environment:

All nonliving features present

during service encounter.

Contact personnel:

Employees other than

primary providers that interact with

consumer.

Service Provider:

Primary provider of

core service, such as dentist,

physician or instructor.

Other Customers

Customer A : Recipient of

bundle of benefits created through

service experience.

Customer B : Other customers who are part of Customers

As experience. Visible Parts

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WHY STUDY SERVICES?

The size of service sector increase around the world developed & developing countries

Profit & nonprofit arts, education, healthcare, human services, faith based activities.

Services dominate the economy in most nations

Employment shrinking in manufacturing, mining, agriculture

Some of the fastest growth is expected in knowledge-based industries i.e professional, businesses services, education, and health services.

New communication technology some service work can be carried out far from customer

Most new jobs are generated by services

It shaped by govt policies, social changes, business trends, IT, internationalization

These forces reshaping demand, supply, competitive landscape, customers styles of decision making

Powerful forces are transforming service market

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