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Tips of Studying

Tips of Studying. Know the key terms and definitions at the end of each chapter. Pay attention to examples, figures and tables. Study the three team assignments and presentations. Go over the mid-term. Practice using a calculator for control chart formulas. Study with others. Chapter 1.

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Tips of Studying

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  1. Tips of Studying • Know the key terms and definitions at the end of each chapter. • Pay attention to examples, figures and tables. • Study the three team assignments and presentations. • Go over the mid-term. • Practice using a calculator for control chart formulas. • Study with others.

  2. Chapter 1 What is the role of services in an economy?

  3. Service Definition A service is a time-perishable, intangible experience performed for a customer acting in the role of a co-producer.

  4. Role of Services in an Economy

  5. Trends in U.S. Employment by Sector

  6. Stages of Economic Development Pre- Use of Standard dominant human Unit of of living Society Game activity labor social life measure Structure Technology Pre- Against Agriculture Raw Extended Sub- Routine Simple hand Industrial Nature Mining muscle household sistence Traditional tools power Authoritative Industrial Against Goods Machine Individual Quantity Bureaucratic Machines fabricated production tending of goods Hierarchical nature Post- Among Services Artistic Community Quality of Inter- Information industrial Persons Creative life in terms dependent Intellectual of health, Global education, recreation

  7. Economy Agrarian Industrial Service Experience Function Extract Make Deliver Stage Nature Fungible Tangible Intangible Memorable Attribute Natural Standardized Customized Personal Method of Stored in Inventoried Delivered Revealed supply bulk on demand over time Seller Trader Manufacturer Provider Stager Buyer Market User Client Guest The New Experience Economy

  8. The Four Realms of an Experience

  9. Experience Design Principles • Theme the Experience Forum shops • Harmonize Impressions with Positive CuesO’Hare airport parking garage • Eliminate Negative Cuescinemark talking trash containers • Mix in Memorabilia Hard Rock T-shirts • Engage all Five Senses Mist in Rainforest

  10. Source of Service Sector Growth • InnovationPush theory New discovery, Post-itPull theory changing demographic, interest ratesServices derived from products Video RentalInformation driven services statement of transaction for tax prep Difficulty of testing service prototypes focus group • Social TrendsAging of the populationTwo-income familiesGrowth in number of single peopleHome as sanctuary

  11. Chapter 2 How do you categorize a service?

  12. Service/Product Bundle

  13. 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.

  14. Distinctive Characteristics of Services • Customer Participation • Simultaneity • Perishability • Intangibility • Heterogeneity

  15. 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 Degree of labor IntensityMass service: Professional service: * Retailing * Doctors High * Wholesaling * Lawyers * Schools * Accountants * Retail aspects of * Architects commercial banking

  16. 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

  17. 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

  18. 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

  19. 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

  20. Open Systems View of Services Service Process Consumer Evaluation Consumer arrivals Consumer participant departures Criteria (input) Consumer-Provider ( output) Measurement interface 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

  21. Chapter 3 What is a service strategy?

  22. Strategic Service Vision Elements • Target Market SegmentWhat are common characteristics of important market segments? • Service ConceptHow do customers perceive the service concept? • Operating StrategyWhat are important elements of the strategy: operations, financing, marketing, organization, human resources, control? • Service Delivery SystemWhat are important features of the service delivery system including: role of people, technology, equipment, layout, procedures?

  23. Competitive Environment of Services • Relatively Low Overall Entry Barriers • Economies of Scale Limited • High Transportation Costs • Erratic Sales Fluctuations • No Power Dealing with Buyers or Suppliers • Product Substitutions for Service • High Customer Loyalty • Exit Barriers

  24. Competitive Service Strategies • Overall Cost Leadership • Differentiation • Focus

  25. Overall Cost Leadership • Seeking Out Low-cost Customers • Standardizing a Custom Service • Reducing the Personal Element in Service Delivery (promote self-service) • Reducing Network Costs (hub and spoke) • Taking Service Operations Off-line

  26. Differentiation • Making the Intangible Tangible (memorable) • Customizing the Standard Product • Reducing Perceived Risk • Giving Attention to Personnel Training • Controlling QualityNote: Differentiation in service means being unique in brand image, technology use, features, or reputation for customer service.

  27. Focus • Buyer Group: (e.g. USAA insurance and military officers) • Service Offered: (e.g. Shouldice Hospital and hernia patients) • Geographic Region: (e.g. Austin Cable Vision and TV watchers)

  28. Availability Convenience Dependability Personalization Price Quality Reputation Safety Speed Customer Criteria for Selecting a Service Provider

  29. Service Purchase Decision • Service Qualifier:Just to be considered. • Service Winner: Used to make the final choice. • Service Loser:Failure to deliver.

  30. Competitive Role of Information in Services Strategic Focus Competitive Use of Information On-line Off-line (Real time) (Analysis) Creation of barriers to entry: Data base asset: External Reservation system Selling information (Customer) Frequent user club Development of services Switching costs Micro-marketing Revenue generation: Productivity enhancement: Internal Yield management Inventory status (Operations) Point of sale Data envelopment Expert systems analysis (DEA)

  31. The Virtual Value Chain Marketplace vs. Marketspace

  32. Limits in the Use of Information • Anti-competitive (Barrier to entry) • Fairness (Yield management) • Invasion of Privacy (Micro-marketing) • Data Security (Medical records) • Reliability (Credit report)

  33. Using Information to Categorize Customers • Coding (how to handle) • Routing (call centers) • Targeting (hidden discounts) • Sharing (source of revenue)

  34. Chapter 4 How do you develop a new service?

  35. Levels of Service Innovation I. Radical Innovations • Major Innovation internet banking • Start-up Business new service in existing service • New Services for the Market Presently Served kiosks in supermarkets II. Incremental Innovations • Service Line Extensions new menu items • Service Improvements self airline check-in • Style Changes funeral homes celebrate life

  36. Technology Driven Service Innovation • Power/energy • Physical design • Materials • Methods • Information

  37. Service Design Elements • Structural- Delivery system- Facility design- Location- Capacity planning • Managerial- Service encounter- Quality- Managing capacity and demand- Information

  38. New Service Development Cycle • Full-scale launch • Post-launch review Full Launch Development Enablers • Formulation • of new services • objective / strategy • Idea generation • and screening • Concept • development and • testing People Organizational Context Teams • Service design • and testing • Process and system • design and testing • Marketing program • design and testing • Personnel training • Service testing and • pilot run • Test marketing Product Technology Systems Tools Analysis Design • Business analysis • Project authorization

  39. Service Blueprint of Luxury Hotel

  40. Strategic Positioning Through Process Structure • Degree of Complexity Measured by the number of steps in the service blueprint. (clinic vs. hospital) • Degree of Divergence Amount of discretion permitted the server to customize the service. (attorney vs. paralegal)

  41. Generic Approaches to Service Design 1. Production-line McDonald’s • Limit Discretion of Personnel mufflers • Division of Labor MRI tech • Substitute Technology for People greeting card reorder • Standardize the Service franchising - Starbucks 2. Customer as Coproducer Pizza Hut buffet• Self Service automatic check-in at airlines • Smoothing Service Demand midweek ski lift discount 3. Customer Contact front office/back office • Degree of Customer Contact laundry at a hospital • Separation of High and Low Contact Operations Airline reservationists/baggage handler 4. Information Empowerment IT – it’s not just for nerds anymore • Employee cancelled airline flight • Customer package tracking

  42. Customer Value Equation

  43. Chapter 5 What is the role of technology in services?

  44. Technology Technology Technology Customer Server Customer Server Customer Server A. Technology-Free Service Encounter B. Technology-Assisted Service Encounter C. Technology-Facilitated Service Encounter Technology Technology Customer Server Customer Server D. Technology-Mediated Service Encounter E. Technology-Generated Service Encounter Role of Technology MRI, Optometrist, Airlines Personal Care, Professional services Financial planner Tech call center, House arrest monitoring ATM, Web based info, checkout scanning, airport kiosks

  45. Classification of Service Automation • Fixed-sequence (F) automatic tollbooth, newspaper dispenser • Variable-sequence (V) ATM, car wash, collating copy machine • Playback (P) directory assistance, answering machine, spell check • Numerical controlled (N) IRS Forms, animation • Intelligent (I) autopilot, computer games, Doppler radar • Expert system (E) car diagnostics, medical diagnosis, stock trading • Totally automated system (T) telemarketing, eft, space shuttle

  46. Purpose of Web-site • A retail channel Amazon.com • Supplemental channel Barnes & Nobel • Technical support Dell Computer • Embellish existing service HBR, News websites • Order processing Airlines, Expedia.com • Convey information Kelly Blue Book, Dr. Koop • Organization membership asq.org • Games treeloot.com

  47. Chapter 6 What are the dimensions of service quality?

  48. Moments of Truth • Each customer contact is called a moment of truth. • You have the ability to either satisfy or dissatisfy them when you contact them. • A service recovery is satisfying a previously dissatisfied customer and making them a loyal customer.

  49. Dimensions of Service Quality • Reliabilitydependable over time • Responsivenesskeeping customers waiting • Assurance reputation, credentials, confidence, track record • Empathybeing a good listener, putting yourself in their place • Tangiblescleanliness, physical appearance

  50. Perceived Service Quality Word of mouth Personal needs Past experience Service Quality Dimensions Reliability Responsiveness Assurance Empathy Tangibles Service Quality Assessment 1. Expectations exceeded ES<PS (Quality surprise) 2. Expectations met ES~PS (Satisfactory quality) 3. Expectations not met ES>PS (Unacceptable quality) Expected service Perceived service

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