Chapter – 2 The Nature of Services

1. 2 Service Management (5e) Operations, Strategy, Information Technology By Fitzsimmons and Fitzsimmons Chapter – 2 The Nature of Services

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.

3. 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

4. Service/Product Bundle

5. The Service Process Matrix

6. 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.

7. The Service Package (cont.) • 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.

8. 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

9. Strategic Service Classification (Nature of the Service Act)

10. Strategic Service Classification (Relationship with Customers)

11. Strategic Service Classification (Customization and Judgment)

12. Strategic Service Classification (Nature of Demand and Supply)

13. Strategic Service Classification (Method of Service Delivery)

14. Open Systems View of Services

15. Topics for Discussion • What are the characteristicsof 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?