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ServicesandServiceThinking

SSE2300January20th,2009

ServiceDefini>ons

•  Manydefini>onsofserviceareavailablebutallcontainthecommonthemesof“intangibility”andconsump>onatthepointofcrea>on.

•  Consumerinvolvedinhelpingtocreatetheproduct•  Twodefini>ons:

–  Servicesaredeeds,processes,andperformances.(ZeithamlandBitner)

–  Aserviceisa>me‐perishable,intangibleexperienceperformedforacustomerac>ngintheroleofco‐producer.(JamesFitzsimmons)

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Dis>nc>veCharacteris>csofServices

•  CustomerPar>cipa>onintheServiceProcess:Howdoesacustomergetinvolved?Facilityissues?Customer‘ownership’oftheprocess.

•  Simultaneity:Occurring/exis>ngatthesame>me(e.g.,opportuni>esforpersonalselling,interac>oncreatescustomerpercep>onsofquality).

•  Perishability:Subjecttodecay,spoilage,ordestruc>on(e.g.,cannotinventory,opportunitylossofidlecapacity,needtomatchsupply&demand).

•  Intangibility:assetsaresaleablethoughnotphysical(e.g.,crea>veadver>sing,nopatentprotec>on,importanceofreputa>on).

•  Heterogeneity:serviceexperiencesdifferent,diversequality/variability–customerengagementindeliveryprocess.

Dis>nguishingServicesFromGoods

•  Inseparabilityofprovider&consumer– Servicesarecreatedandconsumedatsame>me– Servicescannotbeinventoried– Demandfluctua>onscannotbesolvedbyinventoryprocesses

– Qualitycontrolcannotbeachievedbeforeconsump>on

•  Dogoodscustomizedtoacustomer'sdemandsalsosuggestinseparability?

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Dis>nguishingServicesFromGoods

•  Heterogeneity–  Personalizedservicesincreasesleadstoheterogeneousnature

–  Fromconsumer’sperspec>ve,typicallyawidevaria>oninserviceofferings

–  Perceivedquality‐of‐servicevariesfromoneclienttothenext

•  Goodsmanufacturer–homogeneousqualitypercep>on‐‐‐doprinciplesexistthatwecanapplytotheidiosyncra>cnatureofserviceprocess?

Dis>nguishingServicesFromGoods

•  Intangibility– Servicesoeenideasandconcepts–nottangible– Clientrelianceonserviceproviders’reputa>on‐‐predictorofquality‐of‐service–guidanceinmakingservicechoices

– Howtoensuresomeacceptablequality‐of‐servicelevel

•  Mostservicesinvolvesomegoods.

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Dis>nguishingServicesFromGoods

•  Perishability–  Servicecapacitythatgoesunusedperishes–  Servicescannotbestored.Serviceproviderlosesopportuni>eswhenmaximumcapacityisnotachieved

–  Servicecapabilityes>ma>onandplanning–keyaspectsforservicemanagement

•  Consumerswhopar>cipateinserviceprocessgainknowledge–isthispartofvalue?Impact?

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TheServicePackage

•  Suppor>ngFacility:Thephysicalresourcesthatmustbeinplacebeforeaservicecanbesold.Examples:golfcourse,skilie,hospital,airplane.

•  Facilita>ngGoods:Materialconsumedbybuyeroritemsprovidedbytheconsumer.Examples:fooditems,legaldocuments,golfclubs,medicalhistory.

•  Informa>on:Dataprocessedintoinforma>onthatpermitsservicetobecustomized.Examples:pa>entmedicalrecords,flightseats,customerpreferences,customerloca>ontodispatchtaxi.

TheServicePackage(cont.)

•  ExplicitServices:Benefitsreadilyobservablebythesenses.Theessen>alorintrinsicfeatures.Examples:qualityofmeal,ahtudeofwaiter,on‐>medeparture.

•  ImplicitServices:Psychologicalbenefitsorextrinsicfeaturesthatconsumermaysenseonlyvaguely.Examples:privacyofloanoffice,securityofawell‐litparkinglot.

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ServiceProcessMatrix

Degreeoflaborintensitythera>ooflaborcosttocapitalcost

Degreeofinterac1onandcustomiza1onabilityoftheclienttoaffectspecializa>on

(AdaptedfromLovelock(1983)andFitzsimmons&Fitzsimmons(2003))

ServiceDominantView

•  Threeprincipalno>ons

– Co‐crea>onofvalue–providerandconsumerbothpar>cipate

– Rela>onships–connec>onbetweenproviderandconsumercri>cal

– Serviceprovisioning–deliveryiscri>cal

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WhatisCo‐Produc>on?

•  Viewingservicesaspayforperformance–valueisco‐producedbyclientandprovider(IBM,2006)

•  Customers’par>cipa>oninserviceco‐produc>onprocesseshasincreasedwithrapiddevelopmentofself‐servicetechnologies.Customers’involvementincomple>onofserviceproduc>onanddeliveryprocesses(XueandHarker,2003).

•  Emerging‘co‐produc>on’sector–bothinsideandoutsidepublicservices–serviceusersareregardedasassets,involvedinsupportanddeliveryofservices(InformedChangeFindings,2006).

WhatisCo‐Crea>on?

•  Co‐Crea>onseemstobereplacingthetermCo‐Produc>on

•  Defini>onthesame??•  Althoughservicesareproduced,soaregoodsandsotherewassomeperceptualissuesassociatedwithterm"Co‐Produc>on"

•  Thecustomer/clientplaysanac>veroleincrea>onoftheservice.Thisistrueformostservices.

•  Whatdocrea>onandproduc>onmeaninthecontextoftangiblegoods?

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Provider‐ClientRela>onship

•  Provider–  Anen>ty(person,business,orins>tu>on)thatundertakesac>vi>esto

meetaneed–  Anen>tythatserves

•  Client–  Anen>ty(person,business,orins>tu>on)thatengagestheserviceof

another–  Anen>tybeingserved

•  Generalrela>onshipcharacteris>cs–Theclient–  Par>cipatesintheserviceprocess(alsoknownastheservice

engagement)–  Co‐producesthevalue–  Thequalityofservicedelivereddependsoncustomers'preferences,

requirements,andexpecta>ons

CurrentServicesThinking

•  Serviceisaprovider‐clientinterac>onthatcreatesanddeliversvaluewhilesharingrisks

•  Serviceshavevaluethatcanberented

•  Servicesaretheapplica>onofspecializedcompetences(skillsandknowledge)

•  Servicesareautonomous,plasorm‐independent,func>ons

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ServiceProcessEfficiencyandEffec>veness

•  Customerasco‐producer•  Frontandbackofficeperspec>ves•  Serviceprofitchainfocusoninternalandexternalcustomers

•  Quality(percep>onsvs.expecta>ons)•  Focusonbothefficiencyandeffec>veness•  UseI.T.asproduc>vityenablerforbothinternalandexternalcustomers

ClassifyingServices

•  Generally,not"blackandwhite"–rathertheyfallalongacon>nuum…

•  But,extremesserveuswellinaneduca>onalprocess

•  Waysofclassifying– NatureoftheServiceAct– Rela>onshipwithCustomers– Customiza>onandJudgment– NatureofDemandandSupply– MethodofServiceDelivery

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StrategicServiceClassifica>on(NatureoftheServiceAct)

Direct Recipient of the Service People Things

Nature of the Service Act

Tangible Actions

Services Directed at People’s Bodies:

Healthcare Passenger transportation Beauty salons Exercise clinics Restaurants

Services Directed at Goods and other Physical

Possessions: Freight transportation Repair and maintenance Laundry and dry cleaning Veterinary care

Intangible Actions

Services Directed at People’s Minds:

Education Broadcasting Information Services Theaters Museums

Services Directed at Intangible Assets:

Banking Legal services Accounting Securities Insurance

StrategicServiceClassifica>on(Rela>onshipwithCustomers)

Type of Relationship between Service Organization and its Customers

“Membership” Relationship No Formal Relationship

Nature of the Service Delivery

Continuous Delivery of Service

Insurance Telephone subscription Electric Utility Banking

Radio station Police protection Lighthouse Public highway

Discrete Transactions

Long-distance phone calls Theater series tickets Transit pass Wholesale buying club Airline frequent flyer

Toll highway Pay phone Movie theater Public transportation Restaurant

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StrategicServiceClassifica>on(Customiza>onandJudgment)

Extent to which Service Characteristics are Customized

High Low

Extent to which Customer Contact Personnel Exercise Judgment in Meeting Individual Customer Needs

High Surgery Taxi service Gourmet restaurant

Education (large classes) Preventive health programs Family restaurants

Low Telephone service Hotel services Retail banking Cafeteria

Public transportation Movie theater Spectator sports Institutional food service

StrategicServiceClassifica>on(NatureofDemandandSupply)

Extent of Demand Fluctuations over Time

Wide Narrow

Extent to which Supply is Constrained

Peak demand can usually be met without delay

Electricity Telephone Hospital maternity unit Police emergencies

Insurance Legal services Banking Laundry and dry cleaning

Peak demand regularly exceeds capacity

Tax preparation Passenger transportation Hotels and motels

Fast food restaurant Movie theater Gas station

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StrategicServiceClassifica>on(MethodofServiceDelivery)

Availability of Service Outlets Single Site Multiple Site

Nature of Interaction Between Customer and Service Organization

Customer Travels to Service Firm

Theater Barbershop

Bus service Fast food chain

Service Provider Travels to Customer

Pest control service Taxi

Mail delivery AAA emergency repairs

Transaction is at Arm’s Length

Credit card company Local TV station

National TV network Telephone company

OpenSystemsViewofServiceOpera>ons

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Tradi>onalandEmergingServicesComparison

Tien,J.M.andD.Berg,(2003)“ACaseforServiceSystemsEngineering,”JournalofSystemsScienceandSystemsEngineering,12(1),pp.13‐38.

TopicsforDiscussion

•  Whatservicecharacteris>csaremostappropriateforInternetapplica>ons?

•  Whendoescollec>nginforma>onthroughservicemembershipbecomeaninvasionofprivacy?

•  Listsomemgmt.problemsassociatedwithallowingemployeestousejudgmentinservingcustomers.

•  Whatfactorsareimportanttoconsiderwhenawemp>ngtoenhanceaservicefirm’simage?

•  Whatcontribu>onstothemanagementandopera>onofaprofessionalservicefirmcananengineeringgraduateprovide?