Ch 1 The Service Economy (mgmt 456)

Examples of Explicit Services

- the absence of pain when a tooth is repaired - a smooth-running automobile after a tuneup, - the response time of a fire department.

Example of Information Services

-electronic patient medical records, -airline showing seats available on a flight -customer preferences from prior visits, - GPS website location of customer to dispatch a taxi, -Google map link on a hotel website.

Distinctive Characteristics of Service Operations

1. Customer Participation: Customer can play an active role 2. Simultaneity: Services are created and consumed simultaneously and thus cannot be stored 3. Perishability: Unused capacity is wasted 4. Intangibility: 5. Heterogeneity: 6. Non-transferrable Ownership:

Service Process Matrix (4 types)

1. Service Factories 2. Service Shops 3. Mass Service 4. Professional Service

Five feature of Service Package

1. Supporting Facility 2. Facilitating Goods 3. Information 4. Explicit Goods 5. implicit Goods

Consumer Service Experience Design (5 principles CSED)

1. Theme the experience 2. Harmonize expressions with positive cues 3. Eliminating Negative cues 4. mix in memorabilia 5. Engage all 5 senses

Examples of service shops

: Hospitals, Auto Repairs, Other Repair Services

Information (type of service package)

Data that is available from the customer or provider to enable efficient and customized service.

The Four Realms of an Experience

Entertainment - least involved level of experience Educational Estheticism Escapist - Requires the most commitment

Theme the experience (CSED)

Ex: Forum Shops in Las Vegas that are decorated with Roman columns and where salespeople wear togas

Examples of Professional Service

Ex: Physicians, Lawyers, Accountants, Architects Managers must concentrate on personal matters

Eliminate Negative Cues (CSED)

Ex: talking trash containers (i.e., the container says "thank you" when an item is discarded) at a Cinemark Theater in Austin, Texas

Harmonize Impressions with Positive Cues (CSED)

Ex: the O'Hare Airport Parking Garage where each floor is painted with a distinctive color and unique music is played to help returning travelers find their parked automobiles (e.g., hard rock on the first floor and classical on the second

What stage of economic activities are most countries in?

Primary Stage · economies here are extracting natural resources from land · Productivity level is low, Income is subject to fluctuations · More than 70% of labor force in Africa & Asia engage in extracted activities

Implicit Services (type of service package)

Psychological benefits that the customer may sense only vaguely, or the extrinsic features of the service.

Explicit Services (type of service package)

The benefits that are readily observable by the senses and that consist of the essential or intrinsic features of the service.

Facilitating Goods (type of service package)

The material purchased or consumed by the buyer, or the items provided by the customer.

Supporting Facility (type of service package)

The physical resources that must be in place before a service can be offered. Examples- golf course, a ski lift, a hospital, and an airplane

Stages of Economic Activities (SOEA)

Top To Bottom § Quinary (Extending Human Potential) § Quaternary (Trade & Commerce) § Tertiary (Domestic Service) § Secondary (Goods-producing) § Primary (extractive)

The Service Package

a bundle of goods and services with information that is provided in some environment.

Mix In Memorabilia (CSED)

a. providing group pictures of vacationers at Club Med. b. Ex: Hard Rock Tshirts

Clark Fisher Hypothesis

classification of economies by noting the activity of the majority of the workforce · productivity (output/labor-hour) increases in one sector, the labor force moves into another

Services are (def 1)

deeds, processes, and performances

Examples of Facilitating Goods

golf clubs, skis, food items, replacement auto parts, legal documents, and medical supplies.

What are examples of Supporting Facility ?

golf course, a ski lift, a hospital, and an airplane

Customer Participation (Service Ops)

i. Attention to Facility Design, opportunities for co-production 1. physical surroundings of the service facility 2. service is an experience - occurring in the front office of the service facility 3. quality of service is enhanced - service facility is designed from the customer's perspective 4. influence customer's perception of service - Attention to interior decorating, furnishings, layout, noise, and even color can Innovative Services - opened the back office to public scrutiny to promote confidence in the service o Ex: some restaurants provide a view into the kitchen o some auto repair bays can be observed through windows in the waiting area

Intangibility (service ops)

i. Services are ideas and concepts; ii. Service innovation is not patentable, franchising, customer must rely on the reputation of the service iii. Gov' intervened to guarantee acceptable service performances with the use of registration, licensing, and regulation · EX: public construction plans must be approved by a registered professional engineer · doctor must be licensed to practice medicine, · The power company is a regulated utility

Non-transferrable Ownership (service ops)

i. Services do not involve the transfer of ownership ii. customers gain access or rental of resources for a period of time such 1. Ex: hotel room for the night or a seat in an airplane - Customers do not purchase an asset but, have use of the asset for a specific time, · Ex: use of human labor (e.g., dentist), · technology (e.g., cellular network), · physical asset (e.g., theme park). Notice that in each example, customers often share the service provider's asset concurrently with other customers

heterogeneity (service ops)

i. the combination of the intangible nature of services and the customer as a participant in the service delivery system results in a variation of service from customer to customer i. interaction between customer and employee in services creates the possibility of a more satisfying human work experience ii. Services with exception of interaction iii. Services that process information (e.g., communications) or customers' property (e.g., brokerage services) iv. Personal Attention - creates opportunities for variability in the service that is provided

service is (def 2)

is a time-perishable, intangible experience performed for a customer acting in the role of a co-producer.

Service factories (Service matrix)

provide a standardized service with high capital investment, much like a line-flow manufacturing plant.

Engage all five Senses (CSED)

the Rainforest Café in Las Vegas (e.g., jungle sounds and mist in the air)

Examples of Implicit Services

the status of a degree from an Ivy League school, the privacy of a loan office, and worry-free auto repair.

Economic Evolution

§ 1900 - 3 out of every 10 workers in the US were employed in service sector § 1950 - employment in services accounted for 50 percent of the workforce § Today - services employ about 8 out of every 10 workers § Since WWII major evolution in sector employment from being predominantly manufacturing and agriculture to being predominantly services. · This impacted on culture, demographics, and education

Perishability (service ops)

§ Cannot inventory, opportunities loss of idle capacity, need to match supply with demand § A service is a perishable commodity (service cant be stored) § In each case, a lost opportunity has occurred. Because a service cannot be stored, § Ex: empty airline seat, an unoccupied hospital or hotel room, or an hour without a patient on the day of a dentist § Consumer demand for services exhibits very cyclic behavior over short periods of time

Examples of Customer Participation

§ popularity of supermarkets and discount stores is predicated on the idea that customers are willing to assume an active role in the retailing process. § accuracy of a patient's medical record can influence the effectiveness of the attending physician greatly. § education of a student is determined largely by the student's own effort and initiative. § Fast-food restaurants best illustrate the value of customer participation

Mass service (service matrix)

· Customers will receive an undifferentiated service in a labor-intensive environment,

Secondary examples (Goods-producing) (SOEA)

· E: Manufacturing, Process

Primary examples (extractive) (SOEA)

· Ex: Agriculture, mining, Fishing, Forestry

Examples of Service Factories

· Ex: Airlines, Trucking, Hotels Resorts & Recreation

Quinary examples (Extending Human Potential) (SOEA)

· Ex: Health, Education, Research, Arts, Recreation

Tertiary examples (Domestic Service) (SOEA)

· Ex: Restaurants, Hotels, Laundry, Maintenance

Quaternary examples (Trade & Commerce) (SOEA)

· Ex: Transportation, Communications, Retailing, Finance, Government

Examples of Mass service

· Retailing, Wholesaling, Schools, Retail aspects of commercial banking

Simultaneity (services ops)

· Services Created and consumed simultaneously cannot be stored. · Services act as an OPEN SYSTEM w/ the full impact of demand variations being transmitted to the system. · Decoupling in services is achieved through customer waiting · corresponding problem is a customer waiting, or "queuing · problems of selecting service capacity, facility utilization, and use of idle time all are balanced against customer waiting time · services must rely on other measures to ensure the quality of services delivered.

Services are (def 3)

· Services are economic activities offered by one party to another, most commonly employing time-based performances to bring about desired results in recipients themselves or in objects or other assets for which purchasers have responsibility. In exchange for their money, time, and effort, service customers expect to obtain value from access to goods, labor, professional skills, facilities, networks, and systems; but they do not normally take ownership of any of the physical elements involved

Service System (def 4)

· a value-coproduction configuration of people, technology, other internal and external service systems, and shared information ex: language, processes, metrics, prices, policies, and laws

Examples of perishability

· eating lunch between noon and 1 PM places a burden on restaurants to accommodate the noon rush · Public Sector - demand for emergency ambulance service normally peaks around the 6 PM rush hour and has a lull around 3 AM while the city sleeps. · Recreational and transportation services - seasonal variation in demand creates surges in activity

Service shops (service matrix)

· permit more service customization, but they do so in a high-capital environment. · Managers Require close monitoring of technological advances to remain competitive;

Professional service (service matrix)

· will be given individual attention by highly-trained specialists.