reflection
AKA-Pro
MGT345_545Class2.ppt
MGT 345/545
Class 2
Managing Service
Operations
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Housekeeping Items
- Syllabus Questions???
- 1st Quiz – 9/29
1. Service Operations are focused of efficient and effective processes.
Answer: TRUE
2. Managing a “moment of truth” reflects your ability to be honest with customers.
5. Three key stakeholders are employees, customers and shareholders.
3. One of the benefits of either Perspective Taking or Empathy is that you don’t have to be fully engaged in the conversation.
Answer: FALSE
Answer: FALSE
Answer: FALSE
4. If a company wants to excel in Service Operations, it only has to look as far as its people.
Answer: TRUE
Product vs. Service
- Four Key Differences Between the Two:
- Intangibility
- Heterogeneity
- Simultaneous Production and Consumption
- Perishability
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Intangibility
- Services Generally Can’t Be:
- Inventoried
- Patented
- Readily displayed or communicated
- Some think of service delivery as a performance
- Services can’t be felt, touched, or tasted like goods
- Tangibility exists on a continuum
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Tangibility
Tangible
Intangible
Rushton and Carson, 1985
Tangibility Spectrum
Implications of Intangibility
- Services cannot be inventoried
- Services cannot be easily patented
- Services cannot be readily displayed or communicated
- Pricing is difficult
Heterogeneity
- Quality of services differ from one organization to another
- Quality of services differ from one performer to another
- Quality of services differ with the same performer on different occasions
- Dependent on employee actions
- Numerous uncontrollable factors
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Implications of Heterogeneity
- Service delivery and customer satisfaction depend on employee and customer actions
- Service quality depends on many uncontrollable factors
- There is no sure knowledge that the service delivered matches what was planned and promoted
- Expectations and Perceptions
Simultaneous Production and Consumption
- Customers participate in and influence the transaction
- Customers influence each other
- Employees influence the service outcome
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Implications of Simultaneous Production and Consumption
- Customers participate in and affect the transaction
- Customers affect each other
- Employees affect the service outcome
- Decentralization may be essential
- Mass production is difficult
Perishability
Services often cannot be saved, stored, resold, or returned
- Airplane seat
- Doctors appointment
- Hotel room
- Wedding night
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Perishability Implications
- Demand for strong recovery strategies when things go wrong since a service can’t be returned
- Service recovery
Examples of Service Industries
- Health Care
- Hospital, medical practice, dentistry, eye care
- Professional Services
- Accounting, legal, architectural
- Financial Services
- Banking, investment advising, insurance
- Hospitality
- Restaurant, hotel/motel, bed & breakfast, ski resort, rafting
- Travel
- Airline, travel agency, theme park
- Others
- Hair styling, pest control, plumbing, lawn maintenance, counseling services, health club, interior design
Do Services Matter?
- Services dominate U.S. and worldwide economies
- Services as a percentage of the economy continue to grow
- Quality service delivery leads to customer retention and loyalty
- Quality service delivery can lead to profit
- Services can help companies differentiate themselves
Service vs. Customer Service
- Service offerings are intangible products offered for sale to customers
- These can be services sold to business customers (e.g., consulting services, shipping services, maintenance services) or to end consumers (e.g., restaurant services, transportation, health care)
- Service offerings can be sold by traditional service companies (e.g., Bank of America) as well as manufacturers (e.g., IBM)
Service vs. Customer Service (cont.)
- A company does not need to be a “service company” in the traditional sense to sell services
- Customer service can also be offered by service, IT and manufacturing businesses
- It is service provided in support of a company’s core products, whether these core products are services or goods
- Customer service includes things like answering questions, billing, handling complaints, taking orders, hospitality, etc.
What is Service? The Old View
- Service is a technical after-sale function that is provided by the service department.
Old view of service =
Customer Service Center
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What is Service? The New View
Service includes every interaction between any customer and anyone representing the company, including:
Customer
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Service Can Mean all of These
- Service as a product in and of itself
- Customer service
- Services as value add for goods
- Service embedded in a tangible product
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Traditional Marketing Mix
- All elements within the control of the firm that communicate the firm’s capabilities and image to customers or that influence customer satisfaction with the firm’s product and services:
- Product
- Price
- Place
- Promotion
Expanded Mix for Services –
The 7 Ps
- Product
- Price
- Place
- Promotion
- People
- All human actors who play a part in service delivery and thus influence the buyer’s perceptions: namely, the firm’s personnel, the customer, and other customers in the service environment.
- Physical Evidence
- The environment in which the service is delivered and where the firm and customer interact, and any tangible components that facilitate performance or communication of the service.
- Process
- The actual procedures, mechanisms, and flow of activities by which the service is delivered—the service delivery and operating systems.
Expanded Marketing Mix for Services
Challenges for Services
- Defining and improving quality
- Ensuring the delivery of consistent quality
- Designing and testing new services
- Communicating and maintaining a consistent image
- Accommodating fluctuating demand
- Motivating and sustaining employee commitment
- Coordinating marketing, operations, and human resource efforts
- Setting prices
- Finding a balance between standardization versus customization
Perceptions & Reality
Most surveys indicate that, generally, consumers believe the quality of services are continuing to improve. If so, why is there so much focus on poor service delivery?
- More companies offering tiered services ($$$$)
- Self-service/Technology-based (no humans)
- Higher expectations (WOM – Yelp,etc…)
- Cost cutting or placement less skilled workers
- Walking the Walk
BREAK
Is this a product or a service?
When you have a product people expect to pay for it in advance. When you go to Costco to buy toilet paper, don’t you have to pay for it before you use it? We’re used to paying for products up front and services after they have been rendered. Imagine getting your house cleaned. The service was performed first and then you paid the bill. Products are paid for before you use them.
Customer Support for an Apple Computer
Is this a product or a service?
24 Hour Security Surveillance at DePaul
M&Ms in the Hotel Minibar
Personal Trainer
AAA Tire Repair
An Online Payroll Processing Website
Consider the following scenario…
Employee: You work in a neighborhood pharmacy, WeCare, answering customers’ calls and ringing up sales. Even though you know that the pharmacy’s motto is “We take care of you, no matter what.” you have been given strict instructions by the pharmacist not to give medical advice or recommend particular medications.
Customer: You have a terrible sore throat and high fever but you don’t want to go to the doctor. You walk into the nearest WeCare Pharmacy and ask what might be wrong with you, and which over-the-counter medications you might take to alleviate the symptoms. As you walk in, you notice that the pharmacy’s motto is “We take care of you, no matter what.”
How should the Employee Respond?
JYSKE BANK
