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Learning Objectives
Explain what is meant by a service-product bundle. Identity and critique the five distinctive characteristics of a service operation and explain the implications for managers. Explain how services can be described as customers renting resources. Describe a service using the five dimensions of the service package. Use the service process matrix to classify a service. Explain how a strategic classification of services can be helpful to managers. Explain the role of a service manager from an 2-2 open-systems view of service.
Service-Product Bundle
Element Business Core Peripheral Goods Peripheral Service Variant Core Goods Example Custom clothier Business suits Garment bag Deferred payment plans Coffee lounge Core Service Example Business hotel Room for the night Bath robe In house restaurant Airport shuttle
2-3
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 involvement in delivery process results in variability Customer Participation in the Service Process: attention to facility design, opportunities for co-production, concern for customer and employee behavior 2-4
Place and space rental Labor and expertise Physical facility usage Network usage
Creates the option of renting a good upon demand rather than purchase. Service often involves selling slices of larger physical entities. Labor and expertise are renewable resources. Time plays a central role in most services. Service pricing should vary with time and availability.
2-6
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 2-7 customer to dispatch a taxi.
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.
2-8
Low
services
High
2-9
Tangible actions
Peoples minds:
Education Broadcasting Information services Theaters Museums
Intangible assets:
Banking Legal services Accounting Securities Insurance
Intangible actions
2-10
No formal
Radio station Police protection Lighthouse Public Highway
Discrete transactions
Long-distance phone calls Theater series tickets Transit pass Wholesale buying club Airline frequent flyer
2-11
High
Low
Low
2-12
Wide
Insurance
Narrow
Tax preparation
2-13
Theater Barbershop Taxi Pest control service Credit card company Local TV station
Bus service Fast-food chain Mail delivery AAA emergency repairs Broadcast network Telephone company
2-14
Marketing function: supply Interact with consumers Control demand Modify as necessary Define standard Service package Supporting facility Facilitating goods
Communicate
Basis of
2-15
2-17
Nature of the service act Relationship with customers Customization and judgement Nature of demand and supply Method of service delivery
2-18
How could Village Volvo manage its back office (repair operations) like a factory? How can Village Volvo differentiate itself from Volvo dealers?
2-19
2-20
2-22
Nature of the service act Relationship with customers Customization and judgement Nature of demand and supply Method of service delivery
2-23
What elements of Xpresso Lubes location contribute to its success? Given the example of Xpresso Lube, what other services could be combined to add value for the customer?
2-24
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? Illustrate the distinctive characteristics of service operations for a service with which you are familiar. What factors are important for a manager to 2-25
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.
2-26