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Introducing Services

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Most goods are a complex of goods and facilitating services ... The method of production and delivery is more important for services than for products ... – PowerPoint PPT presentation

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Title: Introducing Services


1
Introducing Services
2
Goods-Services Continuum 1
  • Early definitions
  • good as thing, service as an act
  • where does utility lie
    in physical characteristics or in
    the act?
  • Most goods are a complex of goods and
    facilitating services
  • Most services are a complex of services and
    facilitating goods

3
Goods-Services Continuum 2
Food Tobacco
Public Transportation
Medical Care
Social Clubs
100
0
50
Personal Consumption Expenditure Related to
Services Rathmell (1966)
4
Goods-Services Continuum 3
Teaching
Advertising
Television
Fast Food
Tailored suit
Necktie
Salt
5
Marketing Servicesthe 3 Ps
  • People
  • service personnel and customers (appearance,
    attitude, social skills, etc.)
  • Physical Evidence
  • appearance, design, layout of service setting,
    brochures, promotional materials, etc.
  • Process
  • policies, procedures, mechanization, flow of
    activities, employee discretion, customer
    involvement

6
Characteristics of Services
  • Intangibility
  • Inseparability
  • Variability
  • Perishability

7
Intangibility
  • Difficult to know what an offer is before, during
    or even after receipt
  • Measurement helps the consumer understand the
    service
  • Providing some tangible evidence helps the
    consumer to judge the service
  • prospectus
  • written customer evaluations

8
Inseparability
  • Products Production-Storage-Sold- Consumed
  • Services Sold-Produced Consumed at Same
    Time
  • The customer is involved in production and
    delivery
  • The method of production and delivery is more
    important for services than for products
  • Implication stay close to the customer

9
Variability
  • Can be between firms, within firm, or even within
    an employee over time
  • Training and standardization of procedures can
    help reduce variation
  • Too much emphasis on increased productivity may
    mean that varying customer needs are not being met

10
Perishability
  • Cannot be stored for later sale or use
  • If supply exceeds demand, the value of the
    service is lost
  • If demand exceeds supply, backup cannot be taken
    from a warehouse
  • Fluctuations in demand present greater problems
    for services than for products

11
A Classification Framework
  • Tangible actions directed at peoples bodies
  • health care, passenger transportation,
    restaurants, health clubs
  • Tangible actions directed at goods and other
    physical possessions
  • freight transport, landscaping, dry cleaning
  • Intangible actions directed at peoples minds
  • education, broadcasting, museums
  • Intangible actions directed at intangible assets
  • banking, legal services, accounting, insurance

12
Advantages of this Framework
  • Highlights an important service characteristic
  • Focuses on whom or what the service is directed
    at
  • Categories are clearly distinct and collectively
    exhaustive

13
Characteristics of the Interface
  • The customer is physically present
  • The service and the delivery processes are
    interdependent
  • The customer is in the interface when he is
    visiting the factory

14
Questions Raised Regarding Interface
  • How much physical presence of the customer is
    necessary for the delivery of the service to take
    place?
  • What is the nature of the customer contact and
    the implications for service management?
  • What is the size of the interface?
  • physical space, amount of time, of activities

15
Uncertainty
  • Before
  • customer uncertainty regarding readiness for the
    service (education, fitness program)
  • service provider does not fully understand
    customer inputs
  • During
  • Customers failing to comply with procedures
  • Unrealistic demands or expectations
  • After
  • What has been obtained from the service?

16
Tangible Elements
  • Items bought
  • Items whose status is altered
  • repaired, improved
  • Items that are peripheral
  • admission ticket, appointment card
  • Items that are central to the service
  • ie. car of a rental company
  • Items that form part of the process
  • computers, ATMs

17
Intangible Elements
  • Personal contact with the service personnel
  • The atmosphere generated by the service
    environment
  • Emotions felt by the customer

18
Core Service
  • What needs are we meeting?
  • public transportation safe, reliable
    transportation
  • CPA peace of mind
  • Hotel hospitality, rest
  • Health club improve appearance,
    health

19
Satisfaction
  • Satisfaction Performance - Expectations
  • Performance lt Expectations Dissatisfaction
  • Performance gt Expectations Satisfaction
  • Caution performance and expectations cannot
    be too low.
  • What are your expectations for the speed of
    communications today? (what were they 20 years
    ago?)

20
Perceived Risk
  • Perceived risk is greater for services than for
    products. Why?
  • Intangibility
  • cannot see before purchase
  • Variability
  • production machines are consistent, not humans
  • Guarantees
  • traditionally, services have not provided
    guarantees
  • Complexity

21
Typology of Risks
  • Performance Risks
  • Physical Risk
  • Financial Risk
  • Psychological Risk
  • Social Risk
  • Time Loss

Jacoby and Kaplan (1972)
22
Discussion Questions
  • What makes products and services different?
  • Do you work in a product or a service? Explain.
  • How can we classify different services?
  • Why are perceived risks greater for services than
    for products?
  • Why is the interface important?
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