By: Jaideep Sengupta

Day 1: SESSION 1

The Role of Services

Definition: Service
 “ is an activity or a series of activities which are more or less
intangible in nature, that normally but not necessarily take
place through interactions b/w customer and service
provider”.
Banking &
Personal Care ITES FIN
Legal Services
Safety
Intangible
Services Storage Consulting
Co-Produced
Logistics & Perishability
SERVICES Healthcare
Supply Chain
Experiential
Heterogeneous
Transportation
Repair & Inseparable
Maintenance
Hospitality
Telecom Leasing Entertainment Education
Day 1: SESSION 1
 By James Fitzsimmons:
“ Service enterprises are organizations that facilitate the
production and distribution of goods, support other firms
in meeting their goals, and add value to our personal
lives.”
Day 1: SESSION 1
Percentage of Service Employment in Developed Nations

Country 1980 1987 1993 2000

United States 67.1 71.0 74.3 74.2
Canada 67.2 70.8 74.8 74.1
Israel 63.3 66.0 68.0 73.9
Japan 54.5 58.8 59.9 72.7
France 56.9 63.6 66.4 70.8
Italy 48.7 57.7 60.2 62.8
Brazil 46.2 50.0 51.9 56.5
China 13.1 17.8 21.2 40.6

INDIA 1980-81 1990-91 2000-01 2011-12

% Share of GDP 37.60% 42.50% 50.30% 57.60%
Day 1: SESSION 1
 Role of Services in an Economy
Day 1: SESSION 1
 Stages of Economic Development

Pre- Use of Standard

Society dominant human Unit of of living
Game activity labor social life measure Structure Technology

Pre- Against Agriculture Raw Extended Sub- Routine Simple

Industrial Nature Mining muscle household sistence Traditional hand tools
power Authoritative
Industrial Against Goods Machine Individual Quantity Bureaucratic Machines
fabricated production tending of goods Hierarchical
nature
Post- Among Services Artistic Community Quality of Inter- Information
industrial Persons Creative life in dependent
Intellectual terms of Global
health,
education,
recreation
Day 1: SESSION 1
 The Four Realms of an Experience

Customer Participation

Passive Active

Absorption Entertainment Education

Environmental (Movie) (Language)
Relationship Immersion Esthetic Escapist
(Tourist) (ScubaDiving)
Day 1: SESSION 1
SOURCES OF SERVICE SECTOR GROWTH

Theme the Experience (Forum shops)

Harmonize Impressions with Positive Cues
(O’Hare airport parking garage)
Eliminate Negative Cues
(Cinemark talking trash containers)
Mix in Memorabilia (Hard Rock T-shirts)
Engage all Five Senses (Mist in Rainforest)
Day 1: SESSION 1
SOURCES OF SERVICE SECTOR GROWTH

 Innovation
Push theory (e.g. Post-it)
Pull theory (e.g. Cash Management)
Services derived from products (Video Rental)
Information driven services
Difficulty of testing service prototypes

 Social Trends
Aging of the population
Two-income families
Growth in number of single people
Home as sanctuary
Day 1: SESSION 1
FOOD FOR THOUGHT !!

 Is it possible for an economy to be based entirely on

services?
 What is the value of self service in an economy?
BREAK…….
5 Min Break…..

INTERMISSION
Day1: SESSION 2

The Nature of Services

Day1: SESSION 2
Learning Objectives

 Classify a service into one of four categories using the service

process matrix.
 Describe a service using the four dimensions of the service
package.
 Discuss the managerial implications of the distinctive
characteristics of a service operation.
 Discuss the insights obtained from a strategic classification of
services.
 Discuss the role of a service manager from an open-systems
view of service.
Day 1: SESSION 2
AN INTEGRATED APPROACH TO SERVICE MANAGEMENT

The Eight Components

• Product Elements
• Place, Cyberspace, and Time
• Promotion and Education
• Price and Other User Outlays
+ Process
+ Productivity and Quality
+ People
+ Physical Evidence
Require the Integration of Marketing, Operations, and
Human
Resources
Day 1: SESSION 2
SERVICE/PRODUCT- ANALOGY

ELEMENT CORE GOODS CORE SERVICE

EXAMPLE EXAMPLE
Business Custom clothier Business hotel

Core Business suits Room for the night

Peripheral Garment bag Bath robe

Goods
Peripheral Deferred payment In house restaurant
Service plans
Variant Coffee lounge Airport shuttle
Day1: SESSION 2
THE SERVICE PROCESS MATRIX
Degree of labor Degree of Interaction and Customization
Intensity
Low High
Service factory: Service shop:
* Airlines * Hospitals
Low * Trucking * Auto repair
* Hotels * Other repair services
* Resorts and recreation
Mass service: Professional service:
* Retailing * Doctors
High * Wholesaling * Lawyers
* Schools * Accountants
* Retail aspects of * Architects
commercial banking
Day 1: SESSION 2
THE SERVICE PACKAGE

 Supporting Facility: The physical resources that must

be in place before a service can be sold. Examples are golf
course, ski lift, hospital, airplane.
 Facilitating Goods: The material consumed by the buyer
or items provided by the consumer. Examples are food
items, legal documents, golf clubs, medical history.
 Information: Operations data or information that is
provided by the customer to enable efficient and
customized service. Examples are patient medical
records, seats available on a flight, customer preferences,
location of customer to dispatch a taxi.
Day 1: SESSION 2
THE SERVICE PACKAGE-CONTD.

 Explicit Services: Benefits readily observable by the

senses. The essential or intrinsic features. Examples are
quality of meal, attitude of the waiter, on-time
departure.
 Implicit Services: Psychological benefits or extrinsic
features which the consumer may sense only vaguely.
Examples are privacy of loan office, security of a well
lighted parking lot.
Day 1: SESSION 2
DISTINCTIVE CHARACTERISTICS OF SERVICES.

 Customer Participation in the Service Process: attention

to facility design but opportunities for co-production
 Simultaneity: opportunities for personal selling, interaction
creates customer perceptions of quality
 Perishability: cannot inventory, opportunity loss of idle
capacity, need to match supply with demand
 Intangibility: creative advertising, no patent protection,
importance of reputation
 Heterogeneity: customer participation in delivery process
results in variability
Day 1: SESSION 2
DISTINCTIVE CHARACTERISTICS OF SERVICES.

 Customer Participation in the Service Process: attention

to facility design but opportunities for co-production
 Simultaneity: opportunities for personal selling, interaction
creates customer perceptions of quality
 Perishability: cannot inventory, opportunity loss of idle
capacity, need to match supply with demand
 Intangibility: creative advertising, no patent protection,
importance of reputation
 Heterogeneity: customer participation in delivery process
results in variability
Day 1: SESSION 2
STRATEGIC SERVICE CLASSIFICATION (NATURE OF THE
SERVICE ACT))
Direct Recipient of the Service
Nature of
the Service Act PEOPLE THINGS
People’s bodies: Physical possessions:

Health care Freight transportation

Passenger transportation Repair and maintenance
TANGIBLE Beauty salons Veterinary care
ACTIONS Exercise clinics Janitorial services
Restaurants Laundry and dry cleaning

People’s minds: Intangible assets:

Education Banking
INTANGIBLE Broadcasting Legal services
ACTIONS Information services Accounting
Theaters Securities
Museums Insurance
Day 1: SESSION 2
SERVICE CLASSIFICATION (CUSTOMERS RELATIONSHIPCUSTOMERS)
Type of Relationship between Service Organization and Its Customers

Nature 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 tickets Pay phone
Discrete
Transit pass Toll highway
transactions
Sam’s Wholesale Club Movie theater
Airline frequent flyer Public transportation
Day 1: SESSION 2
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
Surgery Preventive health programs
HIGH Taxi services Education (large classes)
Gourmet restaurant Family restaurant
Telephone service Public transportation
Hotel services Spectator sports
LOW Retail banking Movie theater
Cafeteria Institutional food service
Day 1: SESSION 2
OPEN SYSTEMS VIEW OF SERVICES
Day 1: SESSION 2
FOOD FOR THOUGHT !!

 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?
 What contributions to the management of professional
service firms can a business school graduate provide?
Day 1: SESSION 2

THANK YOU