CLASSIFICATION OF SERVICES CLASSIFICATION OF SERVICES
K V PRABHAKAR
CLASSIFICATION OF SERVICES CLASSIFICATION OF SERVICES
THE TRADITIONAL METHOD OF CLASSIFICATION OF SERVICES:
THE FOLLOWING CHART DEPICTS THE TRADITIONAL METHOD:
CONTD., CONTD.,
MODERN METHODS OF CLASSIFYING SERVICES
SOME PROMINENT WAYS OF CLASSIFYING SERVICES INCLUDE:
CONTD., CONTD., 1. UNDERSTANDING THE NATURE OF
SERVICE: Two parameters are used in this
classification (a) Who or what is the direct recipient of the services?
(b) What is the nature service act? The following chart shows this
classification:
CONTD., CONTD.,
2. THE DEGREE OF TANGIBILITY OF SERVICE:
Some services are more tangible than others For example food in a restaurant is a tangible thing,
though the service part may not be The effect of a restaurant visit may be linked with the
tangible items and the satisfied derived from them. But in a consultant’s job, a lot of things remain intangible even after the consultancy is over
Thus different services could be classified on their extent or degree of tangibility.
McGraw-Hill/Irwin ©2003. The McGraw-Hill Companies. All Rights Reserved
Figure 1.1Tangibility Spectrum
TangibleDominant
IntangibleDominant
SaltSoft Drinks
DetergentsAutomobiles
Cosmetics
AdvertisingAgencies
AirlinesInvestment
ManagementConsulting
Teaching
Fast-foodOutlets
Fast-foodOutlets
CONTD., CONTD.,3.WHETHER THE SERVICE IS
DIRECTED AT THE CUSTOMER OR HIS/HER POSSESSIONS:
Some services are performed on the customer or with his/her participation as a part of the service delivery, as in the case of haircut, hotel check-in etc.,
On the other hand, some are provided to his/her possessions such as car, camera or TV repairs.
Strategic Service Classification (Nature of the Service Act)
Strategic Service Classification (Nature of the Service Act) Direct Recipient of the ServiceNature of the Service Act People Things People’s bodies: Physical possessions: Health care Freight transportation Passenger transportation Equipment repair and maintenance
Tangible actions Beauty salons Veterinary care Exercise clinics Janitorial services Restaurants Laundry and dry cleaning
People’s minds: Intangible assets: Education Banking
Intangible actions Broadcasting Legal services Information services Accounting Theaters Securities Museums Insurance
CONTD., CONTD., This classification helps us to clarify
whether : 1.Physical or mental presence is
necessary for the service 2. If necessary, should it be at the
beginning or throughout or at the end Accordingly, the location and schedule
of the service can be determined In low contact services where the
presence is not necessary, the locations can be far away
Mail-orders and home deliveries are possible
CONTD., CONTD., If presence is necessary, high contact
becomes important Then physical facilities and processes
also become more significant Presence provides opportunities for
heightened levels of satisfaction, consequent loyalty and world of mouth publicity
CONTD., CONTD., 4.THE TIME AND PLACE OF SERVICE
DELIVERY: The location can be either the service
provider’s location or the customer’s home or office
For example, the pest control has to be on the site but software services can be provided via internet from any location
Similarly, medical operations have to performed at specific sites recommended by the doctor.
CONTD., CONTD., 5.LEVEL OF CUSTOMIZATION VERSUS
STANDARDIZED: Services can be customized like a theme
birthday party at a hotel or restaurant, or standardized like a standard meal at a south Indian restaurant
Some services tend to be more customized like lawyer’s or doctor’s consultation, whereas there are a few standardized services like some of NIIT computer courses or a McDonald’s menu, ambience and service pattern.
Strategic Service Classification (Customization and Judgment)
Strategic Service Classification (Customization and Judgment) Extent to Which Service Characteristics Are Customized
Extent to Which Personnel
Exercise Judgment in Meeting
Customer Needs High Low
Professional services Education (large classes)
Surgery Preventive health programs
Taxi services Family restaurant
High Gourmet restaurant
Telephone service Public transportation
Hotel services Spectator sport
Low Retail banking (excl. major loans) Movie theater
Cafeteria Institutional food service
CONTD., CONTD., Customization is thus another method of classifying
services based on two dimensions: Extent of customization Extent of judgment/discretion used during service
delivery Low customization is when the service remains
unchanged whoever the customer may be TV, Radios, movies, car servicing etc., belong to this category
Very high customization is when the service is practically tailored to the requirements of the customer, as in the case of legal advice or hospital treatment
CONTD., CONTD., Where discretion is high, training of staff and
control of process are important Where both customization and discretion are
low, standardized procedures and systems may be appropriate
Consistency of delivery, standardization and use of equipment can be attempted if the service moves to the bottom right quadrant
If a service can be moved to the left top quadrant, here is enhancement in value A WOW experience is possible
CONTD., CONTD., With high levels of computerization and “fuzzy logic”,
high levels of customization has become a norm “A market segment of one” captures this trend Students are offered a “cafeteria” of subjects from
which they may choose specified number to complete a course
Mikissimes Design system called the “eye tailor” in USA takes a digital picture of the customer’s face and then adjusts size, shape and color of lens, and offers options for nose-bridge, hinges and arms of the frame designs
Electronic kiosks enable customers to design labels and greeting cards on the spot, composing their own messages
CONTD., CONTD., 6. FORMAL OR INFORMAL RELATIONSHIP WITH
CUSTOMERS: Generally, entry to clubs require formal
membership The Disney world or a move theatre only
requires people to buy a tick for entry, with no record of the name of the customer or any particulars
The telephone and electricity supplying companies require the name,address and other particulars of customers
CRM is very significant in service companies.
CONTD., CONTD., Services like libraries, insurance, banking are available
to those formally approved for the service by a specific service producer, while radio and TV programs may be received by any person without the knowledge of the service producer
Encrypted TV called “pay channels” need membership Airlines try to increase membership through frequent
flyer program Members of hospital get periodical free check ups,
bulletins on health care or fitness facilities The following chart indicates this classification:
Strategic Service Classification (Relationship with Customers)
Strategic Service Classification (Relationship with Customers) Type of Relationship between Service Organization and Its CustomersNature of Service Delivery “Membership” relationship No formal relationship
Insurance Radio station Telephone subscription Police protection
Continuous delivery Electric Utility Lighthouse
of service Banking Public Highway
Long-distance phone calls Restaurant Theater series subscription Pay phone
Discrete transactions Transit pass Toll highway Sam’s Wholesale Club Movie theater Airline frequent flyer Public transportation
CONTD., CONTD., 7.THE EXTENT TO WHICH DEMAND AND SUPPLY
FLUCTUATE: Some services have steady demand like a downtown
restaurant Some others have highly fluctuating demand based on
the time of the day or season like electric power, the demand for which increases or decreases with the weather.
In North Indian plains, coolers and air conditioners are of great demand in the hot months,d and room heaters in the winter months
In the South generally, the weather is more reasonable, except for a couple of months. The power demand fluctuates accordingly.
CONTD., CONTD.,
Demand and supply factors are important in service business because of the characteristic of perishability
The chart below indicates this:
Strategic Service Classification (Nature of Demand and Supply)
Strategic Service Classification (Nature of Demand and Supply) Extent of Demand Fluctuation over Time
Extent to which Supply
Is Constrained Wide Narrow
Electricity Insurance
Peak demand can Telephone Legal services
usually be met Police emergency Banking
without a major delay 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
CONTD., CONTD., 8.INTERACTION WITH PEOPLE OR INANIMATE
OBJECTS/ENVIRONMENT: Some transactions could be done on the phone, like ordering
a new cheque book from a bank Others need the presence of the customer on site, like taking
a flight or eating out Depending on the level and frequency of the customer contact
required, one can classify services into different categories There may be mixed models, where some contact is needed,
but after the customer is on his/her own, like a fast food self-service model.
CONTD., CONTD., 9. LABOR INTENSITY:
Yet another classification is based on the amount of labor intensity in service delivery and the extent of interaction with the customer:
CONTD CONTD If interaction is low, standard operating
procedures can be evolved If interaction is high, the quality of the
response to customer intervention is important
If the labor intensity is high, hiring and training methods as well as scheduling become important
CONTD., CONTD.,
10. PROXIMITY: Some services require the physical proximity of the customer and the service provider. Some do not require this.
Physical proximity may be made possible by either the user or the provider or both
CONTD., CONTD., Some services like couriers, consultancy and
car repairs could be in more than one quadrant. The service provider can be mobile or immobile
Advancements electronics technology is making long-distance provision of services (bottom right quadrant) possible
The internet will bring many services into the bottom right quadrant
Education, consultations, shopping, library references requiring physical and mental presence become possible through the Internet, with both the service provider and the customer being immobile
CONTD., CONTD., Services can cross international
boundaries easily Multiple outlets or franchises improve
the mobility of the provider Mobility of the service provider
improves ease of access but with the Internet, there is effective mobility, despite real immobility
CONTD., CONTD.,
11. COMPLEXITY: A simple classification is concerning the dimensions of the complexity of services and divergence
Complexity refers to the number of steps and sequences in process
divergence refers to the extent of freedom available in taking a step
SUMMING UP SUMMING UP
The usefulness of these classifications or typologies of services depends on how we use them.
If used strategically, for example in making choices which service markets to enter, they may point out if the new area is a ‘core competence's area for the company or not.
Village Volvo’s Service ClassificationVillage Volvo’s Service Classification Nature of the service act
Relationship with customers
Customization and judgement
Nature of demand and supply
Method of service delivery
Xpresso Lube’s Service ClassifictionXpresso Lube’s Service Classifiction Nature of the service act
Relationship with customers
Customization and judgement
Nature of demand and supply
Method of service delivery
Figure 13: Major Categories of Services
Operational Services(i.e., Traditional Service &Support)
Enhancement Services(i.e., “Value-added”)
Professional Services(i.e., Major Change in Process)
Essence of Service Facilitate on-going use ofinformation technology
Increase the value from useof information technology
Major change in adoption oruse of new technology
Orientation On-going operations Project Major program
Examples Hardware Maintenance
Software Support
Installations— relocations
Help desk support
Education & Training
Network Integration
Performance Tuning
Migration Services
Disaster AvoidanceRecovery
Staging Services
BPR Consulting
Systems Integration
Major ApplicationDevelopment
Outsourcing
IT Strategy Consulting
Source: R. Johnson, 1999
Figure 13, continued:Major Categories of Services
Operational Services (i.e.,Traditional Service & Support)
Enhancement Services(i.e., “Value-added”)
Professional Services(i.e., Major Change in Process)
Characteristics Straight-forward— Standardized
Minimal Career Risk
Low $ per Device Contracts
No Change in Operations
Easy to Substitute Vendors
Somewhat Customized
Moderate Career Risk
Moderate $ Contracts
Moderate Change inOperations
Moderately Difficult/Easy toSwitch Vendors
Complex, each deal unique
Significant Career risk
High $ contracts
Major change in operations
Difficult to extract/switchvendors
Sold By Product— Oriented sales force Combination of systems andspecialists sales force
Dedicated consultant salesforce and/or alliance withstrategic consultingpartner
Source: R. Johnson, 1999
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