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Chapter 2 The Nature of Services. Learning Objectives. Service process matrix. The service package. Distinctive characteristics of a service operation. The strategic classification of services. The role of a service manager from an open-systems view of service. . Service/Product Bundle.

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learning objectives
Learning Objectives
  • Service process matrix.
  • The service package.
  • Distinctive characteristics of a service operation.
  • The strategic classification of services.
  • The role of a service manager from an open-systems view of service.
the service process matrix
The Service Process Matrix

Degree of Interaction and Customization

Low High

Service factory: Service shop:

* Airlines * Hospitals

Low * Trucking * Auto repair

* Hotels * Other repair services

* Resorts/ recreation


of labor IntensityMass service: Professional service:

* Retailing * Doctors

High * Wholesaling * Lawyers

* Schools * Accountants

* Retail aspects of * Architects

commercial banking

the service package
The Service Package

1. Supporting Facility

Examples are golf course, ski lift, hospital, airplane.

2. Facilitating Goods

Examples are food items, legal documents, golf clubs, medical history.

3. Information

Examples are patient medical records, seats available on a flight, customer preferences, location of customer to dispatch a taxi.

4. Explicit Services

Examples are quality of meal, attitude of the waiter, on-time departure.

5. Implicit Services

Examples are privacy of loan office, security of a well lighted parking lot.

distinctive characteristics of services
Distinctive Characteristics of Services
  • Customer Participation
  • Simultaneity
  • Perishability
  • Intangibility
  • Heterogeneity
strategic service classification nature of the service act
Strategic Service Classification (Nature of the Service Act)

Direct Recipient of the Service

Nature of

the Service ActPeople Things

People’s bodies: Physical possessions:

Health care Freight transportation

Passenger transportation Repair and maintenance

Tangible actions Beauty salons Veterinary care

Exercise clinics Janitorial services

Restaurants Laundry and dry cleaning

People’s minds: Intangible assets:

Education Banking

Intangible actions Broadcasting Legal services

Information services Accounting

Theaters Securities

Museums Insurance

strategic service classification relationship with customers
Strategic Service Classification (Relationship with Customers)

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 transactions Transit pass Toll highway

Sam’s Wholesale Club Movie theater

Airline frequent flyer Public transportation

strategic service classification customization and judgment
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

strategic service classification nature of demand and supply
Strategic Service Classification (Nature of Demand and Supply)

Extent of Demand Fluctuation over Time

Extent to which Supply

Is ConstrainedWide Narrow

Electricity Insurance

Peak demand can Telephone Legal services

usually be met Police emergency Banking

without a major delay Hospital maternity unit Laundry and dry cleaning

Tax preparation Fast food restaurant

Peak demand regularly Passenger transportation Movie theater

exceeds capacity Hotels and motels Gas station

strategic service classification method of service delivery
Strategic Service Classification (Method of Service Delivery)

Availability of Service Outlets

Nature of Interaction

between Customer and

Service OrganizationSingle site Multiple site

Customer travels to Theater Bus service

service organization Barbershop Fast-food chain

Service provider Taxi Mail delivery

travels to customer Pest control service AAA emergency repairs

Transaction is at Credit card company Broadcast network

arm’s length Local TV station Telephone company

open systems view of services
Open Systems View of Services

Service Process Consumer Evaluation

Consumer arrivals Consumer participant departures Criteria

(input) Consumer-Provider ( output) Measurement


Control Monitor

Customer demandService Operations ManagerService personnel

Production function:

Perceived needs Alter Monitor and control process Schedule Empowerment

Location demand Marketing function: supply Training

Interact with consumers Attitudes

Control demand

Modify as necessary

Define standard

Service package

Supporting facility

Communicate Facilitating goods Basis of

by advertising Explicit services selection

Implicit services