Microsoft PowerPoint Unit 2 The Nature Of Services Nguyen Manh Tuan Distinctive characteristics of Serivce management The Service package Grouping Services by delivery process Clasigy Services for Strategic insights
Unit The Nature Of Services Nguyen Manh Tuan 5/18/2020 nguyen manh tuan – internal use AGENDA Distinctive Characteristics of Service Operations The Service Package Grouping Services by Delivery Process Classifying Services for Strategic Insights An Open-Systems View of Service 5/18/2020 nguyen manh tuan – internal use Learning Objectives Classify a service into of categories using the service process matrix Describe a service using 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 managerial implications from an opensystems view of service 5/18/2020 nguyen manh tuan – internal use Distinctive Characteristics of Service Operations The distinction between a product and a service is hard to make Element Core Goods Example Core Service Example Business Custom clothier Business hotel Core Business suits Room for the night Peripheral Goods Garment bag Bathrobe Peripheral Service Deferred payment plans In house restaurant Variant Coffee lounge Airport shuttle Service/Product Bundlenguyen (Fitzsimmons manh tuan – internal use & Fitzsimmons 2006) 5/18/2020 Distinctive Characteristics of Service Operations Distinction between inputs and resources Inputs are the customers themselves, and Resources are the facilitating goods, employee labor, and capital at the command of the service manager To function, the service system must interact with the customers as participants in the service process Because customers typically arrive at their own discretion and with unique demands on the service system, matching service capacity with demand is a challenge Many of the unique characteristics of services, such as customer participation and perishability, are interrelated 5/18/2020 nguyen manh tuan – internal use Distinctive Characteristics of Service Operations Customer Participation For the customer, service is an experience occurring in the front office of the service facility, and the quality of service is enhanced if the service facility is designed from the customer’s perspective An important consideration in providing a service is the realization that the customer can play an active part in the process Taking the customer out of the process, however, is becoming a common practice 5/18/2020 nguyen manh tuan – internal use Distinctive Characteristics of Services Operations Intangibility (I) Services are ideas and concepts; products are things Therefore, it follows that service innovations are not patentable To secure the benefits of a novel service concept, the firm must expand extremely rapidly and preempt any competitors Franchising has been the vehicle to secure market areas and establish a brand name Franchising allows the parent firm to sell its idea to a local entrepreneur, thus preserving capital while retaining control and reducing risk 5/18/2020 nguyen manh tuan – internal use Distinctive Characteristics of Services Operations Intangibility (I) (cont’) When buying a product, the customer is able to see it, feel it, and test its performance before purchase For a service, however, the customer must rely on the reputation of the service firm In many service areas, the government has intervened to guarantee acceptable service performances Through the use of registration, licensing, and regulation, the government can assure consumers that the training and test performance of some service providers meet certain standards In its efforts to “protect” the consumer, however, the government may be stifling innovation, raising barriers to entry, and generally reducing competition 5/18/2020 nguyen manh tuan – internal use Distinctive Characteristics of Services Operations Heterogeneity (H) The combination of the intangible nature of services and the customer as a participant in the service delivery system results in variation of service from customer to customer The interaction between customer and employee in services, however, creates the possibility of a more satisfying human work experience In services, work activity generally is oriented toward people rather than toward things 5/18/2020 nguyen manh tuan – internal use Distinctive Characteristics of Services Operations Heterogeneity (H) (cont’) In the limited customer-contact service industries, we now see a dramatic reduction in the level of labor intensiveness through the introduction of self-service technology Even the introduction of automation may strengthen personalization by eliminating the relatively routine impersonal tasks, thereby permitting increased personal attention to the remaining work At the same time, personal attention creates opportunities for variability in the service that is provided This is not inherently bad, however, unless customers perceive a significant variation in quality 5/18/2020 nguyen manh tuan – internal use 10 Classifying Services for Strategic Insights Nature of Demand and Capacity To determine the most appropriate strategy in each case, it is necessary to consider the following questions: 1.What is the nature of the demand fluctuation? Does it have a predictable cycle (e.g daily meal demand at a fast-food restaurant) that can be anticipated? 2.What are the underlying causes of these fluctuations in demand? If the causes are customer habits or preference, could marketing produce a change? 3.What opportunities exist to change the level of capacity or supply? Can part-time workers be hired during peak hours? 5/18/2020 nguyen manh tuan – internal use 37 Classifying Services for Strategic Insights 5/18/2020 Nature of Demand for the Service Relative to Capacity nguyen manh tuan – internal use (Fitzsimmons & Fitzsimmons 2006) 38 Classifying Services for Strategic Insights Method of Service Delivery The method of service delivery has both a geographic component and a level-ofcustomer-interaction component Services with multiple sites have significant management implications for ensuring quality and consistency in the service offering 5/18/2020 nguyen manh tuan – internal use 39 Classifying Services for Strategic Insights 5/18/2020 Method of Service Delivery nguyen manh tuan – internal use (Fitzsimmons & Fitzsimmons 2006) 40 An Open-Systems View of Service An Open-Systems View of Service Service organizations are sufficiently unique in their character to require special management approaches that go beyond the simple adaptation of the management techniques found in manufacturing a product The distinctive characteristics suggest enlarging the system view to include the customer as a participant in the service process 5/18/2020 nguyen manh tuan – internal use 41 An Open-Systems View of Service 5/18/2020 Open Systems View of Services nguyen manh tuan – internal use (Fitzsimmons & Fitzsimmons 2006) 42 An Open-Systems View of Service The role of the service operations manager includes the functions of both production and marketing in an open system with the customer as a participant The traditional manufacturing separation of the production and marketing functions, with finished-goods inventory as the interface, is neither possible nor appropriate in services 5/18/2020 nguyen manh tuan – internal use 43 An Open-Systems View of Service Marketing performs important functions in dailyservice operations: (1) educating the consumer to play a role as an active participant in the service process and (2) “smoothing” demand to match service capacity This marketing activity must be coordinated with scheduling staff levels and with both controlling and evaluating the delivery process By necessity, the operations and marketing functions are integrated for service organizations 5/18/2020 nguyen manh tuan – internal use 44 An Open-Systems View of Service For services, the process is the product The presence of the customer in the service process negates the closed-system perspective that is taken in manufacturing Techniques to control operations in an isolated factory producing a tangible good are inadequate for services No longer is the process machine-paced and the output easily measured for compliance with specifications 5/18/2020 nguyen manh tuan – internal use 45 An Open-Systems View of Service Instead, customers arrive with different demands on the service; thus, multiple measures of performance are necessary Service employees interact directly with the customer, with little opportunity for management intervention This requires extensive training and empowerment of employees to act appropriately in the absence of direct supervision 5/18/2020 nguyen manh tuan – internal use 46 An Open-Systems View of Service Further, customer impressions of service quality are based on the total service experience, not just on the explicit service that is performed A concern for employee attitudes and training becomes a necessity to ensure that the implicit service is also appreciated by the customer When viewed from the customer’s perspective, the entire service process raises concerns ranging from the aesthetic design of the facility to pleasant diversions in waiting areas 5/18/2020 nguyen manh tuan – internal use 47 An Open-Systems View of Service An open-system concept of services also allows one to view the customer as a co-producer Permitting the customer to participate actively in the service process (e.g., providing a salad bar at a restaurant) can increase productivity, which in turn can create a competitive edge The management of an open system requires techniques and sensitivities different from those of a closed system 5/18/2020 nguyen manh tuan – internal use 48 SUMMARY Service managers are faced with non-routine operations in which only indirect control is possible In services, it is the human element that is central to effective operations For example, the unavoidable interaction between service provider and consumer is a source of great opportunity, as in direct selling However, this interaction seldom can be fully controlled; thus, service quality may suffer For this reason, the attitude and appearance of personnel in service organizations are important considerations 5/18/2020 nguyen manh tuan – internal use 49 SUMMARY For services, the presence of the customer in the process materially alters what is viewed as the product In many respects, the service manager adopts a style of management that incorporates the functions of marketing and operations 5/18/2020 nguyen manh tuan – internal use 50 THE END 5/18/2020 nguyen manh tuan – internal use 51 ... The service act can be considered across two dimensions: who or what is the direct recipient of the service, and the tangible nature of the service Thinking creatively about the nature of the. .. Characteristics of Services Operations Heterogeneity (H) ? ?The combination of the intangible nature of services and the customer as a participant in the service delivery system results in variation of service. .. integrated for service organizations 5/18 /20 20 nguyen manh tuan – internal use 44 An Open-Systems View of Service For services, the process is the product ? ?The presence of the customer in the service